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Printed by A. Strahan, 
Printers-Street, London. 


The uneo'pected rapidity with which this 
second edition has followed the first publica- 
tion of this work, has scarcely afforded time 
for any material alteration or improvement. 
Yet tlie Author has availed herself of a few 
useful hints from her friends, and of some 
recent valuable publications on Political Eco- 
nomy, which have enabled her to throw some 
additional light upon a few particular subjects, 

London, July 11 th, 181 7. 

A ^ 


In offering to the Public this small work, 
in which it is attempted to bring within 
the reach of young persons a science 
which no English writer has yet presented 
in an easy and familiar form, the author 
is far from inferring, from the unexpected 
success of a former elementary work, on 
the subject of Chemistry, that the present 
attempt is likely to be received with 
equal favor. Political Economy, though 
so immediately connected with the happi- 
ness and improvement of mankind, and 
the object of so much controversy and 
speculation among men of knowledge, is 
A 3 


not yet become a popular science, and is 
not generally considered as a study essen- 
tial to early education. This work, there- 
fore, independently of all its defects, will 
have to contend against the novelty of the 
pursuit with young persons of either sex, 
for the instruction of whom it is especially 
intended. If, however, it should be found 
useful, and if, upon the whole, the doc- 
trines it contains should appear sound and 
sufficiently well explained, the author flat- 
ters herself that this attempt will not be 
too severely judged. She hopes it will be 
remembered that in devising the plan of 
this work, she was in a great degree obliged 
to form the path she has pursued, and had 
scarcely any other guide in this popular 
mode of viewing the subject, than the re- 
collection of the impressions she herself 
experienced when she first turned her at- 
tention to this study ; though she has sub'- 
sec|uently derived great assistance from the 


kindness of a few friends, who revised her 
sheets as she advanced in the undertaking. 

As to the principles and materials of the 
work, it is so obvious that they have been 
obtained from the writings of the great 
masters who have treated this subject, and 
more particularly from those of Dr. Adam 
Smith, of Mr. Malthus, M. Say, M. Sis- 
mondi, Mr. llicardo, and Mr. Blake, that 
the author has not thought it necessary to 
load these pages with repeated acknowledg- 
ments and incessant references. 

It will immediately be perceived by those 
to whom the subject is not new, that a few 
of the most abstruse questions and contro- 
versies in Political Economy have been en- 
tirely omitted, and that others have been 
stated and discussed without any positive 
conclusion being deduced. This is a de- 
fect unavoidably attached not only to the 


author's limited knowledge, but also to the 
real difficulty of the science. In general, 
however, when the soundness of a doctrine 
has appeared well established, it has been 
stated conscientiously, without any excess 
of caution or reserve, and with the sole 
object of diffusing useful truths. 

It has often been a matter of doubt 
among the author's literary advisers, whe- 
ther the form of dialogues, which was 
adopted in the Conversations on Chemistry, 
should be preserved in this Essay. She has, 
however, ultimately decided for the affirm- 
ative ; not that she particularly studied 
to introduce strict consistency oi' character, 
or uniformity of intellect, in the remarks 
of her pupil,— an attempt which might have 
often impeded the elucidation of the sub- 
ject ; but because it gave her an opportu- 
nity of introducing objections, and placing 
in various points of view questions and 


answers as they had actually occurred to 
her own mind, — a plan which would not 
have suited a more didactic composition. 
It will be observed accordingly, that the 
colloquial form is not here confined to the 
mere intersection of the argument by ques- 
tions and answers, as in common school- 
books : but that the questions are generally 
the vehicle of some collateral remarks con- 
tributing to illustrate the subject ; and that 
they are in fact such as would be likely to 
aiise in the mind of an intelligent young 
person, fluctuating between the impulse of 
her heart and the progress of her reason, 
and naturally imbued with all the preju- 
dices and popular feelings of uninformed 




Conversation I. Introduction Page 1 

— — — — — II. Introduction — continued 17 

III. On Property - - - 30 

_— — . IV. Property — continued - 52 

« V. On the Division of La- 
bour ----- 67 

VI. On Capital - - - 87 

I. VII, Capital — continued - 105 

— — VIII. On W^ages and Popula- 
tion ----- 119 
— — — IX. Wages and Population 

— continued - - - 140 
— — — — — . X. On THE Condition of THE 
Poor 159 


Conversation XI. On Revenue Page 1 80 
— : XII. Revenue FROM Land- 
ed Property 199 

. ■ I XIII. Revenue from the 

Cultivation of 
Land - - - 232 
; . «- XrV. Revenue from Ca- 
pital lent - - 267 

XV. On Value AND Price 289 

XVL On Money - - 315 

, XVII. Money — continued 340 

. XVIII. Commerce - - - 364 

XIX. On Foreign Trade 384 

_ XX. Foreign Trade — 

continued - ~ - 405 

— r.- . XXI. Foreign Tkade — 

continued - - - 419 
n . I ., XXII. On Expenditure 441 





MRS. B. 

We differ so much respecting the merit of the 
passa^ you mentioned this morning, that I cannot 
help suspecting some inaccuracy in the quotation. 


Then pray allow me to read it to you ; it is im- 
mediately after the return of Telemachus to Sa- 
lentum, when he expresses his astonishment to 
Mentor at the change that has taken place since 
his former visit ; he says, " Has any misfortune 
happened to Salentum in my absence? the magni- 
ficence and splendour in which I left it have dis- 



appeared. I see neither silver, nor gold, nor 
jewels ; the habits of the people are plain, the build- 
ings are smaller and more simple, the arts lan- 
guish, and the city is become a desert." — " Have 
you observed," replied Mentor with a smile, " the 
state of the country that lies round it ?" — " Yes," 
said Telemachus, " I perceive that agriculture is 
become an honourable profession, and that there 
is not a field uncultivated." — " And which is best," 
replied Mentor, " a superb city, abounding with 
marble, gold, and silver, with a steril and neglected 
country; or a country in a state of high cultiva- 
tion, and fruitful as a garden, with a city where 
decency has taken place of pomp ? A great city 
full of artificers, who are employed only to effe- 
minate the manners, by furnishing the superfluities 
of luxury, surrounded by a poor and uncultivated 
country', resembles a monster with a head of enor- 
mous size, and a withered, enervated body, with- 
out beauty, vigour, or proportion. The genuine 
strensfth and true riches of a kingdom consist in 
the number of people, and the plenty of provisions ; 
and innumerable people now cover the whole ter- 
ritory of Idomeneus, which they cultivate with un- 
wearied diligence and assiduity. His dominions 
may be considered as one town, of which Salentum 
is the centre ; for the people that were wanting in 
the fields, and supei-fluous in the city, we have re- 
moved from the city to the fields." 


Well, must I proceed, or have I read enough to 
convmcc you that Mentor is right ? 

MRS. B. 

I still persist in my opinion ; for though some of 
the sentiments in this passage are perfectly just, yet 
the general principle on which they are founded, 
that town and country thrive at the expense of 
each other, I believe to be quite erroneous ; I am 
convinced, on the contrary, that flourishing cities 
are the means of fertilising the fields around them. 
Do you see any want of cultivation in the neigh- 
bourhood of London ? or can you name any 
highly improved country which does not abound 
with wealthy and populous cities ? On the other 
hand, what is more conmion than to observe de- 
cayed cities environed by barren and ill-cultivated 
lands ? The purple and gold of Tyre during the 
prosperity of the Phoenicians, far from depriving 
the fields of their labourers, obliged that nation to 
colonise new countries as a provision for its excess 
of population. 


That is going very far back for an example. 

MRS. B. 

If you wish to come down to a later period, 
compare the ancient flourishing state of Phoenicia, 
B 2 


with its present wretchedness, so forcibly described 
by Volney in his travels. 


Has not this wretchedness been produced by 
violent revolutions, which during a course of ages 
have impoverished that devoted counti'y, and does 
it not continue in consequence of the detestable 
policy of its present masters? But in the natural 
and undisturbed order of things, is it not clear 
that the greater number of labourers a sovereign 
should, after the example of Idomeneus, compel to 
quit the town in order to work in the country, 
the better that country would be cultivated ? 

MRS. B. 

I do not think so ; I am of opinion, on the con- 
trary, that the people thus compelled to quit the 
town, would not find work in the country. 


And why not ? 

MRS. B. 

Because there would already be as many labour- 
ers in the country as could find employment. 


In England that might possibly be the case, but 
would it be so in badly-cultivated countries ? 



MiflS. B. 

I ihink it would. 


Do you mean to say that if a country which is ill- 
cultivated were provided with a greater number of 
labourers it would not be improved ? You must 
allow that this requires some explanation, 

MRS. B. 

It does so, and perhaps even more than you 
imagine ; for you cannot well understand this ques- 
tion without some knowledge of the principles of 
political econom3\ 


I am very sorry to hear that, for I confess that I 
have a sort of antipathy to political economy. 

MRS. u. 
Are you sure that you understand what is 
meant by political economy ? 


I believe so, as it is so often the subject of con- 
versation at home ; but it appears to me the most 
uninteresting of all subjects. It is about custom- 
houses, and trade, and taxes, and bounties, and 
smuggling, and paper-money, and the bullion- 
committee, &c. which I cannot hear named without 
B 3 


yawning. Then there is a perpetual reference to 
the works of Adam Smith, whose name is never 
uttered witliout such a respectful, and almost reli- 
gious veneration, that I was induced one day to 
look into his work on Political Economy to gain 
some information on the subject of corn, but what 
with forestalling, regrating, duties, drawbacks, and 
limiting prices, I was so overwhelmed by a jargon 
of uninteUigible terms, that after running over a 
few pages I threw the book away in despair, and re- 
solved to eat my bread in humble ignorance. So 
if our argument respecting town and country relates 
to political economy, I fancy that I must be con- 
tented to yield the point in dispute without under- 
standing it. 

MRS. B. 

Well then, if you can remain satisfied with your 
ignorance of political economy you should at least 
make up your mind to forbear from talking of it, 
since you cannot do it to any purpose. 


Oh ! that, I assure you, requires very little effort ; 
I only wish that I was as certain of never hearing 
the subject mentioned as I am of never talking 
upon it myself. 

MRS. B. 

Do you recollect how heartily you laughed at 


poor Mr. Jourdain in the Bourgeois Gcntilhomme, 
when he discovered that he had been speaking in 
prose all his Hfe without knowing it? — Well, my 
dear, you frequently talk of political economy 
without knowing it. But a few days since I heard 
you deciding on the very question of the scarcity 
of corn ; and it must be confessed that your ver- 
dict was in perfect unison with your present pro- 
fession of ignorance. 


Indeed I only repeated what I had heard from 
very sensible people, that the farmers had a great 
deal of corn ; that if they were compelled to bring 
it to market there would be no scarcity, and that 
they kept it back with a view to their own interest, 
in order to raise the price. Surely it does not re- 
quire a knowledge of political economy to speak on 
so common, so interesting a subject as this first 
necessary of life. 

MRS. B. 

The very circumstance of its general interest 
renders it one of the most important branches of 
political economy. Unfortunately for your resolu- 
tion, this science spreads into so many ramifications 
that you will seldom hear a conversation amongst 
liberal-minded people without some reference to it. 
It was but yesterday that you accused the Birming- 
B 4 


ham manufacturers of cruelty and injustice towards 
their workmen, and asserted that the rate of wages 
should be proportioned by law to that of pro- 
visions ; so that the poor might not be sufferers by 
a rise in the price of bread. I dare say you thought 
that you had made a very rational speech when 
you so decided ? 


And was I mistaken ? You begin to excite my 
curiosity, Mrs. B. ; do you think I shall ever be 
tempted to study this science ? 

MRS. B. 

I do not know ; but I have no doubt that I shall 
convince you of your incapacity to enter on most 
subjects of general conversation, whilst you remain 
in total ignorance of it ; and that however guarded 
you may be, that ignorance will be betrayed, and 
may frequently expose you to ridicule. During the 
riots at Nottingham I recollect hearing you con- 
demn the invention of machines, which, by abridg- 
ing labour, throw a number of workmen out of 
employment. Your opinion was founded upon mis- 
taken principles of benevolence. In short, my 
dear, so many things are more or less connected 
with the science of political economy, that if you 
persevere in your resolution, you might almost as 
well condemn yourself to perpetual silence. 



I should at least be privileged to talk about 
dress, amusements, and such lady-like topics. 

MRS. B. 

I have heard no trifling degree of ignorance of po- 
litical economy betrayed in a conversation on dress. 
*' What a pity," said one lady, " that French lace 
should be so dear ; for my part I make no scruple 
of smuggling it; there is really a great satisfaction 
in clieatin<j the custom-house." Another wondered 
she could so easily reconcile smuggling to her con- 
science; that she thought French laces and silks, 
and all French goods, should be totally prohibited ; 
that she was determined never to wear any thing 
from foreign countries, let it be ever so beautiful ; 
and that it was shameful to encourage foreign ma- 
nufactures whilst our own poor were starving. 


What fault can you find with the latter opinion ? 
It appears to me to be replete with humanity and 

MRS. B. 

The benevolence of the lady I do not question ; 
but without knowledge to guide and sense to re- 
gulate the feelings, the best intentions will be 
frustrated. The science of political economy is 
B 5 


intimately connected with the daily occurrences of 
life, and in this respect differs materially from that 
of chemistry, astronomy, or electricity; the mis- 
takes we may fall into in the latter sciences can 
have little sensible effect upon our conduct, whilst 
our ignorance of the former may lead us into 
serious practical errors. 

There is scarcely any history or any account of 
voyages or travels that does not abound with facts 
and opinions, the bearings of which cannot be un- 
derstood without some previous acquaintance with 
the principles of political economy : besides, should 
the author himself be deficient in this knowledge, 
you will be continually liable to adopt his errors 
from inability to detect them. This was your case 
in reading Telemachus. Ignorance of the prin- 
ciples of political economy is to be discovered in 
some of the most elegant and sensible of our writers, 
especially amongst the poets. That beautiful com- 
position of Goldsmith, the Deserte<l Village, is 
full of errors of this description, which, from its 
great popularity, are veiy liable to mislead the 


I should almost regret to learn any thing which 
would lower that beautiful poem in my estimation. 

MRS. B. 

Its intrinsic merit as a poem is quite sufficient to 


atone for any errors in scientific principles. Truth 
is not, you know, essential to poetic beauty ; but it 
is essential that we shoukl be able to distinguish 
between truth and fiction. 


Well, after all, Mrs. B., ignorance of political 
economy is a very excusable deficiency in women. 
It is the business of Government to reform the 
prejudices and errors which prevail respecting it ; 
and as we are never likely to become legislators, 
is it not just as well that we should remain in 
happy ignorance of evils which we have no power 
to remedy ? 

MRS. B. 

When you plead in favour of ignorance, there 
is a strong presumption that you are in the wrong. 
If a more general knowledge of political economy 
prevented women from propagating errors respect- 
ing it, no trifling good would ensue. Childhood 
is spent in acquiring ideas, adolescence in discri- 
minating and rejecting those which are false; how 
greatly we should facilitate this labour by diminish- 
ing the number of errors imbibed in early youth, 
and by inculcating such ideas only as are founded 
in truth. 

B 6 




Surely you would not teach political economy 
to children ? 

MRS. B. 

I would wish that mothers were so far compe- 
tent to teach it, that their children should not have 
any thing to unlearn ; and if they could convey 
such lessons of political economy as Miss Edge- 
worth gives in her story of the Cherry Orchard, 
no one I should think would esteem such inform- 
ation beyond the capacity of a child. 


I thought I remembered that story perfectly, but 
I do not recollect in it a single word relative to po- 
litical economy. 

MRS. B. 

The author has judiciously avoided naming the 
science, but that little tale contains a simple and 
beautiful exposition of the division of labour, the 
merit of which you would more highly appreciate 
if you were acquainted with its application to poli- 
tical economy. You would perhaps also allow 
children to hear the story of King Midas, whose 
touch converted every thing into gold. 


Is that also a lesson of political economy ? 1 


think, Mrs. B., you have the art of converting 
every tiling you touch into that science. 

MRS. B. 

It is not art, but the real nature of things. The 
story of King Midas shows, that gold alone does 
not constitute wealth, and that it is valuable onlj 
as it bears a due proportion to the more immedi- 
ately useful productions of the earth. 


But children will not be the wiser for such 
stories unless you explain their application to poli- 
tical economy. You must give them the moral of 
the fable. 

MRS. B. 

The moral is the only part of a fable which 
children never read ; and in this they are perfectly 
right, for a principle abstractedly laid down is be- 
yond their comprehension. The application will 
be made as they advance in life. Childhood is the 
period for sowing the seed, not for forcing the 
fruit; you must wait the due season if you mean to 
gather a ripe and plentiful harvest. 


Well, my dear Mrs. B., what must I do ? You 
know that I am fond of instruction, and that I am 
not afi-aid of apphcation. You may recollect what 


pleasure I took in the study of chemistry. If you 
could persuade me that political economy would be 
as interesting, and not more difficult, I would beg 
of you to put me in the way of learning it. Are 
there any lectures given on this subject ? or could 
one take lessons of a master ? for as to studying 
scientific books, I am discouraged by the difficulty 
of the terms; when the language as well as the 
subject is new, there are too many obstacles to con- 
tend with at first setting out. 

MRS. B. 

The language of a science is frequently its most 
difficult part, but in |X)litical economy there are 
but few technical terms, and those you will easily 
comprehend. Indeed, you have already a consi- 
derable stock of information on this subject, but 
your notions are so confused and irregular, such 
a mixture of truth and error, that your business 
will rather be to select, separate, and methodise 
what you already know, than to acquire new ideas. 
It is not in my power to recommend you a master 
on this subject, for there are none — perhaps be- 
cause there are no pupils. Those who seek for 
instruction on political economy, read the works 
written on that science, particularly the treatise of 
Adam Smith. Lectures on political economy have 
occasionally been given at the universities, especially 
at Edinburgh, and many of the students tiiere are 


well versed in this science, as they turn their atten- 
tion to it at an age when the mind is not yet strongly 
biassed by prejudice. 


But what then am I to do, Mrs. B. ? I cannot 
attend those lectures, and I fear I shall never have 
courage to undertake the study of treatises which 
appear to me so difficult. 

MRS. B. 

Perhaps I may be able to smooth the way for 
you. It has been my good fortune to have passed a 
great part of my life in a society where this science 
has been a frequent topic of discussion, and 
the intei-est I took in it has induced me to study its 
principles in the works of the best writers on the 
subject; but I must tell you fairly, that I did not 
commence my studies by opening these works at 
random, or by consulting Adam Smith on an in- 
sulated point, before I had examined his plan, or 
understood his object. I knew that in order to 
learn I must begin at the beginning, and if you are 
of opinion that my experience can be of any service 
to you, and will be content to receive an explan- 
ation in a familar manner of what has been discussed 
or investigated by men of acknowledged talent and 
learning, I will attempt to guide you through the 
first elements of the science, without, however, pre- 
suming to penetrate into its abstruse parts. 



Well then, I am quite decided to make the at- 
tempt; you are but too good to me, Mrs. B., to 
allow me again to become your pupil. You have 
so much indulgence, however, that I am never afraid 
of exposing my ignorance by my enquiries, though 
I fear I shall put your patience to a severe trial. 


INTRODUCTION — continued. 





I HAVE been thinking a great deal of political 
economy since yesterday, my dear Mrs. B., but 
I fear not to much purpose ; at least I am no far- 
ther advanced than to the discovery of a great con- 
fusion of ideas which prevails in my mind on the 
subject. That science seems to comprehend every 
thing, and yet I own, that I am still at a loss to 
understand what it is. Cannot you give me a short 
explanation of the nature of the science, that I may 
have some clear idea of it to begin with ? 

MRS. B. 

I once heard a lady ask a philosopher to tell her 
in a few words what is meant by political economy. 
Madam, replied he, you understand perfectly what 
is meant by household economy ; you need only ex- 


tend your idea of the economy of a family to that 
of a whole people — of a nation, and you will have 
some comprehension of the nature of political eco- 


Considering that he was limited to a few words, 
do you not think that he acquitted himself ex- 
tremely well ? But as I have a little more patience 
than this lady, I hope you will indulge me with a 
more detailed explanation of this universal science. 

MRS. B. 

Political economy treats of the formation, the 
distribution, and the consumption of wealth ; it 
teaches us the causes which promote or prevent 
its increase, and their influence on the happiness or 
misery of society. 

In a country of savages, you find a small num- 
ber of inhabitants spread over a vast tract of land. 
Depending on the precarious subsistence afforded 
by fishing and hunting, they are frequently subject 
to dearths and famines, which cut them off in great 
numbers: they rear but few children, for want de- 
stroys them in their early years ; the aged and in- 
firm arc often put to death, but rather from motives 
of humanity than of cruelty ; for the hunter's life 
requiring a great extent of country, and long and 
perilous excursions in quest of food, they would be 
wholly incapable of following the young and robust. 


and would die of hunger, or become a prey to wild 

If these savages begin to apply themselves to 
pasturage, their means of subsistence are brought 
within narrower limits, requiring only that degree 
of wandering necessary to provide fresh pasturage 
for their cattle. Their flocks ensuring them a 
more easy subsistence, their families begin to in- 
crease ; they lose in a great measure their ferocity, 
and a considerable improvement takes place in their 

By degrees the art of tillage is discovered, a small 
tract of ground becomes capable of feeding a greater 
relative number of people; the necessity of wan- 
dering in search of food is superseded ; families 
begin to settle in fixed habitations, and the arts of 
social life are introduced and cultivated. 

In the savage state, scarcely any form of govern- 
ment is established ; the people seem to be under 
no control but that of their military chiefs in time 
of warfare. 

The possession of flocks and herds in the pas- 
toral state introduces property, and laws are neces- 
sary for its security ; the elders and leaders therefore 
of these wandering tribes begin to establish laws, 
to violate which is to commit a crime, and to 
incur a punishment. This is the origin of social 
order; and when in the third state the people 
settle in fixed habitations, the laws gradually as- 


sume the more regular form of a monarchical or 
republican government. Every thing now wears 
;i new aspect ; industry flourishes, the arts are in- 
vented, the use of the metals is discovered ; labour 
is subdivided, every one applies himself more par- 
ticularly to a distinct employment, in which he 
becomes skilful. Thus, by slow degrees, this 
people of savages, whose origin was so rude and 
miserable, become a civilised people, who occupy 
a highly cultivated country, intersected by fine 
roads, leading to wealthy and populous cities, and 
carrying on an extensive trade both at home and 
with other countries. 


This is a very pleasing outline of the history of 
the rise and progress of civilisation : but I should 
like to see it a little more filled up. 

MRS. B. 

The subject you will find hereafter sufficiently 
developed ; for the whole business of political eco- 
nomy is to study the causes wnich have thus co- 
operated to enrich and civilise a nation. This 
science is, therefore, essentially founded upon his- 
tory, — not the history of sovereigns, of wars, and 
of intrigues ; but the history of the arts, of trade, 
of discoveries, and of civilisation. We see some 
countries, like America, increase rapidly in wealth 


and prosperity, whilst others, Hke Egypt and 
Syria, are impoverished, depopulated, and falling 
to decay ; when the causes which produce these 
various effects are well understood, some judgment 
may be formed of the measures which governments 
have adopted to contribute to the welfare of their 
people; whether such or such a branch of com- 
merce should be encouraged in preference to others ; 
whether it be proper to prohibit this or that kind 
of merchandise ; whether any peculiar encourage- 
ment should be given to agriculture ; whether it be 
right to establish by law the price of provisions or 
the price of labour, or whether they should be left 
without control ; and so on. 

You see, therefore, that political economy .conr 
.-ists of two parts, — theory and practice; the 
science and the art. The science comprehends a 
knowledge of the facts which we have enumerated ; 
the art relates more particularly to legislation, and 
consists in doing whatever is requisite to contribute 
to the increase of national wealth, and avoiding 
whatever would be prejudicial to it. Mistakes in 
theory lead to errors in practice. When we 
enter into details we shall have occasion to ob- 
serve that governments, misled by false ideas of 
political economy, have frequently arrested the na- 
tural progress of wealth when it was in their power 
10 have accelerated it. 



But since the world was originally a rude wil- 
derness, and yet has arrived at the inij^roved state 
of civilisation in which we now find it, the errors of 
governments cannot have been very prejudicial. 

MRS. B. 

The natural causes which tend to develop the 
wealth and prosperity of nations are more power- 
ful than the faults of administration, which operate 
in a contrary direction. But it is nevertheless true 
that these errors are productive of a great deal of 
mischief; that they check industry and retard the 
progress of improvement. Under bad govern- 
ments particular classes of people are favoured, 
others discouraged and oppressed : prosperity is 
thus unequally shared, and riches unfairly distri- 
buted. You look very grave, Caroline; do you 
begin to grow tired of the subject ? 


Oh no; I think thus far I have understood you : 
but before we proceed you must allow me to men- 
tion un objection which, I confess, distresses me; if 
it is well founded I shall be quite at variance with 
the maxims of political economy, and that science 
will no longer retain any interest for me. I find 
that you are constantly talking of wealth ; of the 
causes which produce it; of the means of augment- 


ing it. To be i-ich, very rich^ richer than other 
people, seems to be the great ahn of political eco- 
nomy. Whilst religion and morality teach us that we 
should moderate the thirst of gain, that inordinate 
love of wealth is the source of all crimes. Be- 
sides that, it is very evident that the richest people 
are not always the happiest. Now, if wealth does 
not conduce to the happiness of individuals, how 
can it constitute that of nations ? A poor but vir- 
tuous people is surely ha})pier than a rich and 
vicious one. What remarkable examples do we not 
see of this in history. We are taught to admire 
the Greek republics, who despised the pomp and 
luxury of wealth. And then the Romans; during 
the early part of their history they were poor and 
virtuous, but the acquisition of wealth depraved 
their character, a)id rendered them the slaves of 
tyrants. Now political economy appears to me to 
induce the love of riches, and to consider it as the 
only end to be attained by government. 

31 RS. B. 

This is a most alarming attack upon political 
economy ! When, however, you understand it bet- 
ter, you will find that your censure is unfounded. 
At present you must take my word for it, as I 
cannot show you the benefits arising from just 
principles of political economy, before you are ac- 
quainted with the principles themselves : but I can 


assure you that they all tend to promote the happi- 
ness of nations, and the purest morality. I do 
not pretend to deny that wealth, like almost every 
other human good, is liable to abuse ; and the 
Greeks and Romans may, perhaps, in a great mea- 
sure, owe their degradation to the ill use which 
they made of their ill-gotten wealth; for it should 
be observed, that their riches were obtained by 
rapine and plunder, and that they did not arise from 
the gradual and natural growth of industry, in which 
case alone they spread happiness around, creating 
new desires by offering new gratifications. But 
history acquaints us more M'ith the sovereign than 
with the people. In order to be able to form a just 
estimate of the morals and manners of a country, 
we must avail ourselves also of the information of 
travellers, and we shall generally find, that the 
poorer and ruder societies of mankind, are pro- 
portionally miserable in their condition, ferocious 
in their manners, and vicious in their morals. 

That wealth is not sufficient to constitute the 
happiness of a people, I most readily admit; it is 
but one among a number of causes which conduce 
to it. Social happiness is the result of a pure reli- 
gion, good morals, a wise government, and a 
general diffusion of knowledge. Without such 
advantages, wealth can never be enjoyed. But 
these are subjects upon which we can touch only 
incidentally. They constitute the science of general 


politics, and our attention is to be particularly 
directed to political economy, which is but a branch 
of it, and treats especially of the means of promoting 
social happiness so far as relates to the acquisition, 
possession, and use of the objects which constitute 
national wealth. Political economy tends to mode- 
rate all unjustifiable ambition, by showing that the 
surest means of increasing national prosperity are 
peace, security, and justice; that jealousy between 
nations is as prejudicial as between individuals; 
that each finds its advantage in reciprocal benefits; 
and that far from growing rich at each other's ex- 
pense, they nuitually assist each other by a liberal 
system of commerce. Political economy is par- 
ticularly inimical to the envious, jealous, and ma- 
lignant passions ; and if ever peace and moderation 
should flourish in the vvorld, it is to enlightened 
views of this science that we should be indebted 
for the miracle. 

But, my dear Caroline, I suspect that there is 
some error in your idea of riches. What do you 
call riches ? 


Of course to be rich is to have a great income ; 
to be able to spend a great deal more than other 

iMRS. B. 

You speak of the riches of individuals; of com- 
parative wealth. A rich man in one class of so- 


ciety might be poor in another. But this; is not 
the definition that I asked for — what do you un- 
derstand by riches in general — in what docs wealth 
consist ? 


Oh, I suppose you mean money ? — I should say 
wealth consists in gold and silver. 

MRS. B. 

Consider what would be the situation of a coun- 
try which possessed no other wealth than money. 
Do you recollect in what estimation Robinson 
Crusoe held his bag of gold when he was wrecked 
upon a desert island ? 


True: but in an island whlcli is not desert, 
money will purchase whatever you want. 

MRS. B. 

Then I should say that the things which we arc 
desirous to procure with money, such as land, 
houses, furniture, clotlies, foocl,&c. constitute riches, 
as well as the money by which they are obtained. 


Certainly : these arc clearly the things which 
constitute real wealth ; for unless we could pro- 
cure the necessaries of life with gold and silvec^ 




they would be of no more use to us than lead or 

MRS. B. 

We may therefore say that wealth comprehends 
every article of utiHty, convenience, or luxury. 
This includes every object of our wishes which can 
become an article of commerce; such as landed 
estates, houses, the products of agriculture, those 
of manufactures, provisions, domestic animals, in 
a word, whatever can contribute to the welfare and 
enjoyment of man. 


Why should you confine your definition of 
wealth to things that can become articles of com- 
merce ? 

MRS. B. 

Because there are many countries where the 
earth spontaneously produces things which can 
neither be consumed nor sold ; and however valu- 
able such things would be to us, could we obtain 
them, they cannot, under those circumstances, be 
considered as wealth. The herds of wild cattle, 
for instance, which feed on the rich pastures called 
the Pampas, in South America, arc of this descrip- 
tion. Many of those large tracts of land are unin- 
habited, and the cattle that range at large over 
them are of no value. Parties of hunters occasion- 
ally make incursions, and destroy some of them for 
c 2 


the sake of their hides and fat, whilst the flesh, 
whicli wc should esteem most valuable, is either 
left to putrify on the ground, or is used as fuel to 
melt the fat for the purposes of tallow, which being 
transported to places where it can be sold and con- 
sumed, it acquires value and becomes wealth. 

In other parts of America the grass of rich pas- 
tures is burnt on the ground, there being no cattle 
to consume it. 


This may be the case in wild and uncultivated 
countries : but in those which are civilised, any 
land yielding unsaleable produce would be con- 
verted by the proprietor to some other use. 

MRS. B. 

I have heard that the fruit of many of the vine- 
yards in France was not gathered a few years ago, 
the grapes bemg so much reduced in value in con- 
sequence of a decree prohibiting the exportation 
of French wines, that the price at which they 
could be sold would not pay the expense of ga- 
thering them. In England, also, when all kinds 
of colonial produce wore excluded from the con- 
tinent of Europe, coffee is said to have been thrown 
into the sea, because it would not pay the charges 
on being landed. You see, therefore, that the 
effects of war, or other circumstances, may for a 


time, in any countrvs destroy the value of com- 


How very much you have ah'eady extended my 
conception of the meaning of wealth ! And yet I can 
perceive that all these ideas were floating confusedly 
in my mind before. In speaking of wealth we ought 
not to confine ourselves to the consideration of the 
relative wealth of individuals, but extend our views 
to whatever constitutes riches in general, without 
any reference to the inequality of the division. 

All this is perfectly clear : no one can be really 
ignorant of it; it requires only reflection ; and yet 
at first I was quite at a loss to explain the nature 
of wealth. 

MRS. B. 

The confusion has arisen from the common 
practice of estimating riches by money, instead of 
observing that wealth consists in such commodities 
as are useful or agreeable to mankind, of which gold 
and silver constitute but a very small portion. 

€ S 








^Vell, my dear Mrs. B., since you have recon- 
ciJed me to wealth, and convinced me how essential 
it is to the happiness and prosperity of nations, I 
begin to grow impatient to learn what are the best 
means of obtaining this desirable object. 

MRS. B. 

Do not leave every thing to me, Caroline, 
I have told you that you were not without some 



general notions of political economy, though they 
are but ill arranged in your mind. Endeavour, 
therefore, to unravel the entangled thread, and 
discover yourself what are the principal causes of 
the production of wealth in a nation. 


I assure you that I have been reflecting a great 
deal upon the subject. I do not know whether I 
am right, but I think it is labour which is the 
cause of wealth. Without labour the earth would 
yield but very little for our subsistence. How in- 
significant are its spontaneous productions com- 
pared with those derived from agriculture ! The 
crab with the apple; the barren heath with the 
rich pasture of the meadow ! 

MRS. B. 

It is very true that labour is a most essential re- 
quisite to the creation of wealth, and yet it Joes 
not necessarily insure its production. The la- 
bour of the savage who possesses no wealth is often 
more severe than that of our common ploughman, 
whose furrows team with riches. The long and 
perilous excursions of savages in search of prey, 
ti\e difliculty which, from want of skill, they must 
encounter in every process of industry, in con- 
structing the simplest habitations, fabricating the 
rudest implements ; — all concur to increase their 
c 1 


toil. Labour is the lot of man ; whether in a bar- 
barous or a civilised state he is destined to earn 
his bread by the sweat of his brow. But how is it 
that in the one case labour is productive of great 
wealth, whilst in the other it affords barely the 
necessaries of life? 


You have observed that the labour of the savage 
is less advantageous on account of his ignorance 
and want of skill ; besides he works neither with 
the activity and zeal, nor with the steady per- 
severance of men in civilised society. Savages, you 
know, are proverbially noted for their idleness. 

MRS. B. 

Inducements must then be found to rouse them 
from that idleness; motives to awaken their in- 
dustry and habituate them to regular labour. Men 
are naturally disposed to indolence; all exertion 
requires effort, and efforts are not made without 
an adequate stimulus. The activity we behold in 
civilised life is the effect of education ; it results 
from a strong and general desire to share not only 
in the necessaries of life, but in the various com- 
forts and enjoyments with which we are surrounded. 
The man who has reaped the reward, as well as 
undergone the fatigues of daily exertion, willingly 
renews his efforts, as he thus renews his enjoyments. 


But the ignorance of" a savage precludes all desires 
which do not lead to the immediate gratification of 
his wants ; he sees no possessions which tcm})t his 
ambition — no enjoyments which inflame his de- 
sires ; nothing less than the strong impulse of want 
rouses him to exertion ; and, having satisfied the 
cravings of hunijcr, he lies down to rest without a 
tliouijlit of the future. 


But if the desires of savages are so few and so 
easily satisfietl, may not their state be happier than 
that of the labouring classes in civilised countries, 
who wish for so nmch, and obtain so little ? 

MRS. B. 

The brutish apathy which results from gross ig- 
norance can scarcely deserve the name of content, 
and is utterly unworthy that of happiness. Gold- 
smith, in his Traveller, justly as well as beautifully 
observes, that 

" Every want tiiat stimulates the breast 

Becomes a source of pleasure when redress'd." 

Besides, it is only occasionally that a savage can 
indulge in this state of torpid indifference. If you 
consult any account of travels in a savage country, 
you will be satisfied that our peasantry enjoy a 
comparative state of affluence and even of luxury. 
c 5 


But let US suppose a civilised being to come 
among a tribe of savages, and succeed in teach- 
ing some of them the arts of life — he instructs 
one how to render his hut more commodious, an- 
other to collect a little store of provisions for the 
winter, a third to improve the construction of his 
bows and arrows ; what would be the consequences ? 


One might expect that the enjoyment derived 
from these improvements would lead their country- 
men to adopt them, and v,odld introduce a general 
spirit of industry. 

MRS. B. 

Is it not more probable that the idle savages 
would, either by force or fraud, wrest from the in- 
dustrious their hard-earned possessions; that the 
one would be driven from the hut he had con- 
structed with so much care, another robbed of the 
provisions he had stored, and a third would see his 
well-pointed arrows aimed at his own breast ? Here 
then is a fatal termination to all improvement. 
Who will work to procure such precarious pos- 
sessions, which expose him to danger, instead of 
ensuring his enjoyment? 


But all this would be prevented if laws were 
made for the protection of property. 


MRS. B. 

True ; but the right of property must be esta- 
blished, before it can be protected. For nature 
has given mankind every thing in common, and 
property is of human institution. It takes place 
in such early stages of society that one is apt to 
imagine it of natural origin ; but until it has been 
established by law, no man has a right to call any 
thing his own. 


What, not the game he has killed, the hut he 
has built, or the implements he has constructed? 
These may be wrested from him by force ; but he 
who thus obtains them acquires no right to them. 

MRS. B. 
When a man has produced any thing by his 
labour, he has, no doubt, in equity the fairest 
claim to it ; but his right to separate it from the 
common stock of nature, and appropriate it to 
his own use, depends entirely upon the law of 
ihe land. 

In the case of property in land, for instance, it 
■>5 the law which decrees that such a piece of 
ground shall belong to Thomas, such another to 
John, and a third to James ; that these men shall 
have an exclusive right to the possession of the 
land and of its produce; that they may keep, sell, 
or exchange it; give it away during their lives, or 
c 6 

•^<> «)\ P.ROPERTY. 

bequeatli it after their deaths. And, in order 
that this law should be respected, punishments are 
enacted for those who should transgress it. It is 
not until such laws have been made for the in- 
stitution and protection of property, of whatever 
description it be, that the right of property is 


You astonish me ! I thought that property in 
land had always existed ; I had no idea that it was 
a legal institution, but imagined that it had ori- 
ginated from the earliest period of the world. We 
read that in the time of the ancient patriarchs, 
when families became too numerous, they separated; 
and that those who went to settle elsewhere, fed 
their flocks, and occupied the land without molest- 
ation. There was no one to dispute their right to 
it; and after their deaths the children inhabited 
and cultivated the land of their fathers. 

If we were to found a colony in a desert island, 
every man would cultivate as much ground as he 
wanted for his own use, and each having an equal 
interest in the preservation of his possessions, pro- 
perly would thus be established by general agree- 
ment, without any legal institution. 

MRS. B. 
This o-eneral agreement is a kind of law, a very 
imperfect one it is true, and which was perhaps 


ON PIlOPiiUTY. •• 37 

originally fouiuled on the relative strength of inili- 
vitluals. It" one man attempts to carry off the cat- 
tle or the fruits of another, the latter opposes force 
to force; if he is stronger or betteV armed, he eitlier 
kills liis antagonist or drives him away ; if weaker, 
he is despoiled, or he calls in his neighbours to liis 
succour, shows them the common danger, and may 
induce them to unite with him in taking vengeance 
on the aijo-ressor. 

Many incidents of this nature must occur before 
regular laws are instituted ; tliat is to say, before a 
public authority is established, which shall protect 
individuals against those who attack, them, and 
punish the offenders. It is then only that a man 
may say, " This is my field ; this is my house ; 
this seed which I cast into the ground will bring 
forth an abundant jirovision for me and my family ; 
these trees, which I plant, will every year yield us 
fruit, which we alone shall have a right to gather." 


I now comprehend perfectly the advantage of 
such laws — it is security — before they were esta- 
blished, the strong might wrest every thing from 
the weak ; and old men, women, and children who 
had no means of defence, were exposed to their 
rapine and violence. The idle and improvident, 
when in want of subsistence, became the natural 
enemies of the hiborious and industrious. So that 

38 ox PROPERTT. 

\^ithout this law the men who had toile<l hardest 
would be most likely to fall victims to those who 
had done nothing. In a word, the wa?ps would 
devour the honey of the bees. 

MRS. B. 

Yes, security is the grand point; it is security 
which stimulates industry, and renders labour pro- 
ductive; every step towards security is a step 
towards civilisation, towards wealth, and towards 
general happiness. 


All this is very true; yet an objection to the in- 
stitution of inland property has just occurred to 
me which appears of considerable importance. Be- 
fore land became private property, the earth, you 
ray, was possessed in common by all mankind; 
every one had an ccjual claim to it. But the law 
which institutes landed property takes it from man- 
kind at large io give it to a few individuals; in 
order therefore to make some men rich, it makes 
others poor. Now what right has the law to dis- 
possess some in order to enrich others ? It should 
be just, before it is generous. 

This objection, however, does not extend to any 
other than landed property ; nothing is more fair 
than that men should gather the fruits of their 
labour; that they should possess the houses they 


liavc built, tho goods they have fabricated; but the 
land, it appears to me, cannot become private pro- 
perty without injury to others who are thus de- 
prived of their natural right to it. 

MRS. B. 

You would then secure to every one the posses- 
sion of the wealth he may acquire, though you 
would refuse him the means of producing it ? 
You would make him master of his house, but take 
away the ground on which it stands; protect his 
harvests, but not allow him the property of a field 
in which he may raise his crops ? 


I must confess that you have placed my objection 
rather in a ridiculous point of view; but that is not 
enough, Mrs. B. ; you must show me where tjie 
error lies, before I can consent to relinquish it. 

MRS. B. 

In countries newly occupied, grants of land 
are made to those who are willing to reclaim it 
from a state of nature ; it is in cases of conquest 
only, that land has been arbitrarily partitioned by 
the conqueror. Such was the fate of Europe when 
over-run by the northern barbarians, who, by their 
divisioJi of land, laid the Jbundation of the feudal 


But whatever may Iiave been the original causes 
of the division of land, and whetlier or not it were 
equally apportioned at first, it is impossible to 
prevent inequality from arising afterwards. 


Yet we read of laws havinjr been instituted in 
several countiies to preserve this equality, and in 
some instances with considerable success. In 
Rome, fiequent attempts were made to this effect; 
and the Spartans, during a long series of years, 
rigorously persevered in the equal division of landed 

MRS. B. 

And what were the consequences of this attempt? 
At Rome the laws to prevent inequality of landed 
property proved ineffectual ; in Sparta they pro- 
duced a community of warriors, who tyrannised 
with cruelty over a population of slaves, and who 
were not possessed of a single virtue unallied to 
military glory. 

P>oth the virtues and vices of mankind tend 
to destroy this equality ; the laborious, the intel- 
ligent, and skilful, will raise plentiful harvests. 
Nature thus rewards their exertions. The posses- 
sions of the idle, the careless, and the ignorant, 
will, on the contrary, gradually degenerate. Nature 
has annexed this penalty to their neglect. Shall 
we then counteract this wise dispensation by giving 


to the idle tlie reward of industry, and making the 
industrious bear a punishment due to the idle ? 


But poverty frequently arises from sickness and 
misfortune, whicli render men unable to work, and, 
under such circumstances, it is hard to suffer the 
penalty incurred by idleness. 

MRS. B. 

These evils are greatly mitigated by the virtues 
and humane feelings of the more prosperous part 
of the community. 71ie benevolence, generosity, 
compassion, charity, Avhich they call forth, purify 
and refine the enjoyment of wealth, and are among 
its highest gratifications. 

Nature, for equally wise purposes, has dispensed 
lier blessings with various degrees of munificence ; 
in some instances she bestows them with unbounded 
and inexhaustible profusion ; it is thus that she 
has given us light and air, whicli are alike pos- 
sessed and enjoyed by all ; no one ever thought of 
converting these elements into private property; 
and ii'food were as easily obtained, and the human 
frame as readily supplied with nourishment as it 
is with the air we breathe, no one would ever 
have conceived the idea of separating from the 
common stock, and converting into private pro- 
perty, either the food he required, or the land on 
which it was produced. 



How delitrhtful that would be ! Mankind would 
be transformed into a race of contemplative philo- 
sophers, whose only occupation would be to study 
and admire the works of nature ! 

MRS. B. 

You must not trust your judgment so readily 
when it leads you to conclusions so different from 
the established course of nature. We must bear 
in miud that the dispensations of Providence are 
always wise and good, though it is not always in 
our power to trace their beneficial effects. In the 
present instance, however, the design of Providence 
appears sufficiently obvious. Were mankind not 
under the necessity of labouring for a subsistence, 
so far from becoming philosophers, I am inclined 
to think that they would degenerate into a race of 
indolent savages, scarcely raised above the brute 
creation. What motive would they have for ex- 
ertion, what incentive to awaken their faculties, 
and rouse them from the apathy and indolence so 
natural to man ? The necessity of regular industry 
to secure subsistence appears to be the first step 
towards the development of their faculties, both 
physical and mental. But we have observed that 
men will not be induced to cultivate the earth, so 
long as it is possessed in common, when the idle 
may reap the harvest sown by the hand of industry. 


Property in land is therefore of necessity a pre- 
liminary step to cultivation, and we have seen that 
cultivation could not take place were the earth 
unlimited in extent and powers of production. 
Let us then reflect, that when nature confeired 
this blessing upon us with a more sparing hand, 
than she has bestowed the other elements, it was 
doubtless with a view of rousing the latent faculties 
of man, and calling them into action ; it was in 
order to raise him from a state of animal nature 
in which he is assimilated to the beasts that perish, 
and urge him through a progressive course of 
improvement, during which new ideas are succes- 
sively formed, the character is developed by reason, 
the mind strengthened by trials, chastened by ad- 
versity, elevated by piety, softened by social affec- 
tions, enlarged by science, refined by literature, 
and brought at length to that state in which we 
discern the traces of a being destined for immor- 


I am glad we arrive at the same satisfactory con- 
clusion, the happiness of my fellow-creatures, by 
a safer road than that in which my imagination 
had first wandered. There remains no rational 
doubt in my mind of the advantages resulting from 
the division of land, and the accumulation of 
landed property; nor am I disposed to murmur 
at the larger share you have assigned to the moro 


inclustrious and better part of mankind. I see that 
soon after the division of land they must infalhbly 
become the only possessors ; that their property 
should t)c secured to them and to their heirs, and 
that in their hands it will be the most highly culti- 
vated, and yield the greatest produce. 

MRS. B. 

The institution of property in land augments the 
wealth not only of the proprietors, but likewise of 
all other classes of men. 

Land may be considered as the instrument by 
which alone wealth is created ; and we have just 
seen that the security of its possession gives life 
and vigour to industry : it is this security which 
raises the condition of our peasantry so much 
above that of a savage jieople who possess the land 
in common, 


An institution of such evident and general utility 
cannot then be considered as unjust. 

MRS. B. 

Certainly not. It is by the test of general utility 
that the justice of all laws should be tried ; for there 
are nonc'which do not impose some restraint on the 
natural liberty of man, and which, in that point of 
view, might not be deemed objectionable. But 
without the control of laws, we have seen that 


neither the lives, the property, the reputation, nor 
even the liberty of men are secure ; \vc sacrifice 
therefore some portion of that liberty to the law ; 
and, in return, it secures to us the remainder, to- 
gether with every blessing which security can give. 
Blackstone, in his Conunentaries, says, " Every 
*' man, when he enters into society, gives up a part 
** of his natural liberty, as the price of so valuable 
" a purchase ; and in consideration of receiving 
" the advantages of mutual commerce, obliges 
" himself to conform to those laws which the com- 
" munity has thought proper to establish. For no 
" man who considers a moment would wish to 
" retain the absolute and uncontrolled power of 
" doing whatever he pleases, the consequence of 
" which is, that every other man would also have 
" the same power, and there would be no security 
" to individuals in any of the enjoyments of life : 
" political, therefore, or civil liberty, which is that 
" of a member of society, is no other than natural 
" liberty, so far restrained by human laws (and no 
" farther) as is necessary and expedient for the 
" general advantage of the public. 

*' That constitution or form of government, that 
" system of laws, is alone calculated to maintain 
" civil liberty, which leaves the subject entire 
" master of his own conduct, except in those points 
" wherein the public requires some direction or 
" restraint." 



Vou have completely removed all my scruples 
respecting the institution of landed property, 
Mrs. B., let us now, therefore, return to the pro- 
gress of vealth and civilisation. 

MRS. B. 

We must not proceed too rapidly ; for the pro- 
gressive steps in the history of civilisation are ex- 
tremely slow, and we must learn to view the 
development of human intellect and the progress 
^ human industry in successive and almost insensi- 
ble degrees. 

Civilised nations generally originate from the 
settlement of a colony; they seldom arise from a 
savage state. It was in this state we found the 
Indians on the discovery of America; they were 
mere hunters ; and so long as men behold an un- 
limited space before them, in which they may 
wander without obstacle or control, it is difficult 
to conceive any circumstances which should lead 
them to adopt a settled mode of life, and apply 
themselves to tillage. 

In countries abounding with large plains, the 
pastoral mode of life has prevailed; but for this 
purpose there must have been established proper*}' 
in cattle, though the land were possessed in common. 
Such was the case with the ancient Scythians who 
inhabited the vast plains of Tartary, and with the 


modern Tartars and Arabs, who, to this day, are 
wandering tribes, and, like the patriarchs of old, 
live in tents, and travel about with their flocks and 
herds in search of pasture. 

We have observed that men were by nature dis- 
posed to idleness, and this disposition is necessarily 
a great obstacle to the introduction of agriculture ; 
for it requires a considerable degree of foresight 
and knowledge, and a firm reliance on the security 
of property, to labour at one season in order to reap 
the fruits at another. But we may suppose agri- 
culture to be a progressive step from pastoral life; 
that a tribe of shepherds may have met with ene- 
mies in their wandering excursions, and the appre- 
hensions of losing their flocks may have induced 
them to settle ; they would probably choose a spot 
defended by nature from attacks of wild beasts, or 
the incursions of savage neighbours. Thus Cecrops 
pitched upon the rock on which the citadel of 
Athens is founded, to build a town. Or they may 
have been tempted by the attractions of some fruit- 
ful spot, under the protection of a neighbouring 
government able to defend them. Volney, in his 
account of the wandering tribes in Syria, says: 
" As often as they find peace and security, and a 
■*' possibility of procuring sufficient provisions in 
*' any district, they take up their residence in it, 
" and insensibt)' adopt a settled life and the arts of 
*' cultivation." These arts they must have attained 


by very slow degrees — they observed that fruii- 
trees may be multiplied ; that nutritious plants may 
be propagated ; that there are seeds Axhich repro- 
duce every year; and that a great variety of ani- 
mals may be tamed and domesticated. Thus sup- 
plied with a new fund of subsistence, their children 
are better fed, their families increase, and age and 
infancy are protected and provided for. 

But these people arc yet acquainted with only 
the first elements of agriculture ; how many fortu- 
nate chances must have occurred before they 
reached the important era of the cultivation of 
corn ! Wild corn has no where been found, and 
the Greeks imagined that a divinity descended on 
earth, to introduce it, and to instruct them in the 
cultivation of this valuable plant. Athens, Crete, 
Sicily, and Egypt, all claim the merit of being the 
original cultivators of corn ; but whoever are the 
people to whom we are indebted for this important 
discovery, or whatever are the means by which it 
was accomplished, there is none which has had so 
great an influence on the welfare of mankind. 
Feeble as it appears, this ))lant can resist the sum- 
mer's heat and the winter's cold. It flourishes in 
almost every climate, and is adapted not only for 
the food of man, but for that of a great variety of 
domestic animals, and it yields by fermentation a 
pleasant and salubrious beverage. The grain will 
keep many years, and affords such a durable means 

ON PROPEllTV. 4^) 

of subsistence, that danger could no longer be 
apprehended in trusting to futurity, and plenty 
was secured during the longest and most unpro- 
tfuctive winters. 

But the cultivation of this inestimable plant 
cannot be undertaken without considerable funds, 
fixed habitations, implements of husbapdiy *, do- 
mestic animals; in a word, establishments which 
could neither be created nor maintained without 
the institution of property. Savages have no corn, 
no cultivation, no domestic animals; they consume 
and destroy every thing without ever considering 
re-production ; — and how different are the results ! 
We now see millions of men and animals in- 
habiting an extent of country which would scarcely 
have sufficed for the maintenance of two or thretf 
hundred savages. 


Let us rest a little, my dear Mrs. B. I am al- 
most bewildered with the number and variety of 

* These are at first of a very rude and imperfect construc- 
rion. In some parts of India the plough of a Hindoo, even 
lo this day, is formed of a crooked stick very inartificially 
;.harpened, and not unfrequently drawn by his wife. The 
use of domestic animals in agriculture is anotlier step to- 
wards civilisation; but no farming establishment whatever 
could either be created or maintained without the institution 
of property. 



ideas that you have presented to my niind. I won- 
der that these things never occurred to me before r 
but I have been so accustomed to see the world in 
its present improved state, that my attention was 
never drawn to the many obstacles and difficulties 
it must have encountered, and the laborious pro- 
gressive steps it must have made before society 
could have attained its present state of perfection. 

MRS. B. 

Perfection ! comparatively speaking I suppose 
you mean; for it is not long since you were making 
lamentable complaints of the actual state of society; 
in which indeed I could not entirely agree with 
you, though I think that we are still far removed 
fi-om perfection. But let us continue to trace the 
progress of wealth and civiHsation up to their pre- 
sent state, before we begin to find any fault with 
existing institutions. 


I think I have now a very clear idea of the im- 
portant consequences wliich result inhn the estab- 
lishment of property. It puts an end to the 
wandering life of barbarians, induces men to settle, 
and enures them to regular labour ; it teaches 
them prudence and foresight; induces them to em- 
bellish the face of the earth by cultivation ; to mul- 
tiply the useful tribes of animals and nutritious 


plants; and in short, it enables them so prodi- 
giously to augment the stock of subsistence, as to 
transform a country which contained but a few 
poor huts and a scanty population into a great and 
wealthy nation. 

ij _-• 

( 52 ) 


ON PROPERTY --co«jfmM<?rf. 






MRS. B. 

Now that we have traced the rise and progress of 
civilisation to the security of property, let us see 
whether the reverse, that is to say, insecurity of 
property in a civilised country, will not degrade the 
state of man, and make him retrace his steps till 
he again degenerates into barbarism. 


Are there any examples of a civilised people re- 


turning to a savage state ? I do not recollect ever 
to have lieard of such a change. 

MRS. B. 

No, because when property has once been insti- 
tuted, the advantages it produces are such, that it 
can never be totally abolished ; but in countries 
where the tyranny of government renders it very 
insecure, the people invariably degenerate, the 
country falls back into poverty, and a comparative 
state of barbarism. We have already noticed the 
miserable change in the once wealthy city of Tyre. 
Egypt, which was the original seat of the arts and 
sciences, is now sunk into the most abject degre- 
dation ; and if you will read the passages I have 
marked for you in Volney's travels, you Avill find the 
truth of this observation very forcibly delineated. 

CAROLINE reads. 
** When the tyranny of a government drives the 
*' inhabitants of a village to extremity, the peasants 
'• desert their houses, and withdraw with their fami- 
" lies into the mountains, or wander in the plains. It 
" often happens that even individuals turn robbers 
" in order to withdraw themselves from the tyranny 
" of the laws; and unite into little camps, which 
•' maintain themselves by force of arms; these in- 
" creasing become new hordes and new tribes. 
" We may say, therefore, that in cultivated coun-' 
D 6 


" tries the wandering life originates in the injustice 
" or want of policy of the government." 

MRS. B. 

This, you see, is very much to the point; but 
here is another passage equally applicable. 

CAROLINE reads. 

" The silks of Tripoly are every day losing their 
" quality from the decay of the mulberry-trees, of 
" which scarcely any thing now remains but some 
" hollow trunks. Why not plant new ones ? That 
" is an European observation. Here they never 
•' plant; because were they either to build or plant, 
" the Pacha would say this man has money, and 
'• it would be extorted from him." 

Besides, where there is so little actual security, 
v/hat reliance can be placed on futurity ? What 
reason would the proprietors have to hope that the 
mulberry-trees would ever repay them for the trou- 
ble and expense of planting them ? Yet I wonder 
that the government of the country should not, for 
its own sake, encourage the industry of its subjects. 

MRS. B. 

In the wretched government of the Turks, every 
thing is so insecure, from the life and property of 
the sovereign, to that of the lowest of his subjects, 
that no one looks to futurity, but every man eu- 

ON PROl^ERTY. ''>5 

vWvours to grasp at, and enjoy what is immediately 
Nvithin his reach. The following passage will shew 
you what sufferers they all are by such a mistaken 
system of policy. 

CAROLINE (t^eadhig). 
*' In consequence of the wretchedness of the go- 
*' vernment, the greater part of the pachalics are 
'•' impoverished and laid waste. In the ancient 
" registers of imports upwards of 3200 villages 
" were reckoned in that of Aleppo, but at present 
" tl>e collector can scarcely find 400. Such of our 
*' merchants as have resided there 20 years, have 
•' themselves seen the greater part of the environs 
" of Aleppo become depopulated. The traveller 
•' meets with nothing but houses in ruins, cisterns 
" rendered useless, and fields abandoned. Those 
" who cultivated them are fled into the towns, 
" where the population is absorbed, but where at 
" least the individual conceals himself among the 
" crowd from the rapacious hands of despotism. In 
" other countries the cities are in some measure 
" the overflow of the population of the country; in 
*' Syria they are the effect of its desertion. The 
" roads in the mountains are extremely bad, as the 
" inhabitants are so far from levellinnr them that 
■' they endeavour to render them more rugged, in 
•' order, as they say, to cure the Turks of their 
*♦ desire to introduce their cavalry. 
D 4 

5G ON PROPEnrv', 

" The Pacha may applaud himself for penetrat- 
" ing into the most secret sources of private pro- 
*' perty, but what are the consequenceis* ? The 
*' people, denied the enjoyment of the fruits of 
" their labour, restrain their industry to the supply 
" of their necessary wants ; the husbandman sows 
** only to prevent himself from starving, the arti- 
** ficer labours only to maintain his family ; if he 
*' makes any savings he strives to conceal them. 
** The people live therefore in poverty and distress, 
*' but at least they do not enrich their tyrants, 
** and the rapacity of despotism is its own punish- 
<' ment." 

MRS. B. 

The degeneracy of the mighty Persian and In- 
dian monarchies since the conquest of those coun- 
tries by the Mahometans, is also clearly deducible 
from the insecurity of property, and aflbrds the most 
tremendous examples of national decline. Trott, 
in his History of Hindostan, informs us that dur- 
ing the disastrous times of the latter monarchs of 
India, the cruelties and oppressions of the agents 
of government were such that the farmers burnt 
their houses, utensils, and crops, and took refuge 
in the woods and mountains, where those who 
could neither excite charity nor maintain them- 
selves by the sword, perished through want. 


What a melancholy picture this is, my dear 

05r PROPERTY'. 5f 

Mrs. B. ! it is, I think, even more painful to con- 
template than the wretchedness of savages ; for to 
their actual misery these people must add the regret 
of having known better times. 

MRS. B. 
Dr. Clarke's Travels abound with similar in- 
stances of insecurity of property, and legal oppres- 
sion, which subvert society, and degrade the human 
species. " In Circassia," he observess, that " the 
" sower scattering seed, or the reaper who gathers 
" the sheaves, are constantly liable to an assault; and 
" the implements of husbandry are not more es- 
" sential to the harvest than the carbine, the pistol, 
" and the sabre." 

Speaking of the Isle of Cyprus, he says : 
" The soil every where exhibited a white marly 
" clay, said to be exceedingly rich in its na- 
" ture, although neglected. The Greeks are so 
" oppressed by their Turkish masters, that they 
" dare not cultivate the land ; the harvest would 
" instantly be taken from them if they did. Their 
" whole aim seems to be, to scrape together barely 
" sufficient, in the course of the whole year, to 
" pay their tax to the governor. Tiie omission of 
" this is punished by torture or by death : and in 
*' case of their inability to supply the impost, the 
*' inhabitants fly from the island. So many emi- 
" grations of this sort happen during the year that 
D 5 


" the population of Cyprus rarely exceeds 60,000 
" persons, a number formerly insufficient to have 
" peopled one of its towns." 


You have made me sensible of the advantages of 
civilisation ; but yet I confess that my mind is not 
fully satisfied. Is there no medium between a 
savage life and the extreme inequality of con- 
dition which we see in the present state of society ? 
Can we not have conveniencies without luxuries ; 
plenty without superfluity ? I think I have met 
with an example of such a people, Mrs. B. ; but I 
dare not venture to mention my authority, as you 
have once before rejected it. 

MRS. B. 

If you allude to Telemachus, there are many 
sound doctrines of political economy in that work ; 
though it must be acknowledged that it is not free 
fi-om error. But let me hear the sentiments of 
Fenelon on this subject. 


Do you remember that delightful picture which 
he draws of the inhabitants of Boctica ? There is an 
irresistible charm in the description of their hap- 
piness ; and if fabulous, it is certainly meant at 
least to delineate what ought to constitute the hap- 



pjness of nations ; equality, community of goods, 
but few arts and few wants ; an ignorance or con- 
tempt of luxury, and manners perfectly conformed 
to the simplicity of nature. I must read you the 
passage, and you will tell me whether it is not a 
satire on political economy : — 

" They live in common without any partition of 
" lands, the head of every family is its king. They 
*' have no need of judges, for every man submits 
*' to the jurisdiction of conscience. They possess 
" all things in common ; for the cattle produce 
" milk, and the fields and orchards fruit and grain 
" of every kind in such abundance, that a people 
" so frugal and temperate have no need of pro- 
" perty. They have no fixed place of abode ; but 
" when they have consumed the fruits, and ex- 
*' hausted the pasturage, of one part of the paradise 
*' which they inhabit, they remove their tents to 
" another: they have, therefore, no opposition of 
*' interest, but are connected by a fraternal affcc- 
" tion which there is nothing to interrupt. This 
*' peace, this union, this liberty, they preserve by 
" rejecting superfluous wealth, and deceitful plea- 
" sure; they are all free, they are all equal. 

" Superior wisdom, the result either of long ex- 
•' perience, or uncouDnon abilities, is the only mark 
*' of distinction among them ; the sophistry of fraud, 
" the cry of violence, the contention of the bar, 
** and the tumult of battle, are never heard in this 
D 6 



" sacred region, m hich the gods have taken under 
'•' their immediate protection ; this soil has never 
*' been distaincd with human blood, and even that 
*' of a lamb has rarely been shed upon it. When 
*' we first traded with these people, we found gold 
*' and silver used for ploughshares ; and, in ge- 
** neral, employed promiscuously with iron. As 
*' they carried on no foreign trade, they had no 
*' need of money ; they were, almost all, either 
" shepherds or husbandmen ; for as they suffered 
*' no arts to be exercised among them, but such 
** as tended immediately to answer the necessities 
*' of life, the number of artificers was consequently 
*' small : besides, a greater part, even of those that 
*' live by husbandry, or keeping of sheep, are skil- 
" ful in the exercise of such arts, as are necessary 
" to manners so simple and frugal." 

MRS. B. 

This, my dear Caroline, is a representation of 
what the poets call the Golden age, and requires 
only truth to make it perfect. If it were an his- 
torical account, all the conclusions you deduce from 
it would be just; but it is fiction, which you must 
allow makes an essential difference. 

Supposing that the earth yielded spontaneously 
all that is now produced by cultivation ; still with- 
out the institution of property it could not be en- 
joyed : the IVuit would be gathered before it was 

ON rKOrLKlT. Gl 

ripe, aninmls killed before they came lo maturity; 
for who would protect what was not his own ; or 
who would economise when all the stores of nature 
w ere open to him ? There would be a strange 
mixture of plenty, waste, and famine. 

In this country, for instance, where the only 
common property consists in hedge-nuts and black- 
berries, how seldom are they allowed to ripen ? 
In some parts of Spain, where the beauty of the 
climate produces a considerable quantity of good 
wild fruit, it is customary for the priest to bestow 
a blessing upon it before any is allowed to be 
gathered, and this ceremony is not performed till 
t})e fruit is considered to be generally ripe; by 
which means it is prevented from being prematurely 
gathered. It is with the same view that our game- 
laws prohibit shooting, till the season when the 
birds have attained their full growth. 


But though the Boeticans had all their goods in 
common, they were not without laws for protecting 

MRS. B. 

If the earth were possessed in common, who 
would set about cultivating this or that spot of 
ground? Government must allot to every man 
liis daily task, and say to the one. You must work 
in this spot ; to another, You must work in that. 


Would these nion labour with the same activity 
and zeal as if they worked on tlieir own account — 
that is to say, received wages equivalent to their 
exertions? certainly not. Such a system woultl 
transform independent men into slaves, into mere 
mechanical engines. There would be no inequality 
of condition, it is true, but the earth would not 
yield one-tenth part of its actual produce, the po- 
pulation would necessarily be diminished in the 
same proportion, and if all escaped the distresses of 
poverty, none would enjoy the acquisition of riclies, 
an enjoyment which, when derived from the exer- 
cise of our talents and our industry, is a just and 
virtuous feeling; it raises men not only in the scale 
of wealth, but in that of the power of doing good, 
of enlarging the sphere of human knowledge, with 
all the inestimable benefits which result from it. 

There have, Ijowever, really existed establish- 
ments founded on a community of goods. That of 
the Jesuits in Paraguay was of this description. The 
influence of religion enabled these priests to exer- 
cise a despotic sway over the poor Indians whom 
they had converted to Christianity; it must be 
allowed that they tempered their power by a patri- 
archal care of their docile subjects. Such a species 
of government might perhaps be well adapted to 
a tribe of ignorant uncivilised Indians, but it would 
never make a free, a happy, an independent, and a 
wealthy people. I must again repeat it, the in- 


Justry of man requires the stimulus of exclusive 
possession and enjoyment ; and will always be pro- 
portioned to the personal advantage which he de- 
rives from it. 

There is, indeed, still existing a sect of the same 
description called Moravians ; but it is their religi- 
ous tenets alone which enable them to keep up sudi 
an artificial system of community, and it should be 
compared rather to a convent of Monks and Nuns, 
than to a great nation. 


I find 1 must give up the point of community of 
goods; but still I cannot help thinking that the 
great inequality of conditions which exist in the 
present state of society is a serious evil. 

In Switzerland, where there is much less inequa- 
lity of fortune than in this country, I have often 
admired and almost envied the innocent and simple 
manners of the people. They seem not to know 
half our wants, nor to suffer half our cares. 

MRS. B. 

The Swiss are governed by mild and equitable 
laws, which render them a virtuous and a liapjiy 
people : and if they arc not a rich and populous 
nation, it proceeds not from any want of inchistrv, 
but from the obstacles opposed both to agriculture 
and trade by the jiature of their country ; for they 


are on the contrary uncommonly active and enter- 
prising. I have often seen men carry on their 
slioulders baskets of manure up steep ascents inac- 
cessible to beasts of burden, and this for the 
purpose of cultivating some little insulated spot of 
ground, which did not appear worth any such 
labour. The country-women wear their knitting 
fastened round their waists, in order to have it at 
hand to fill up every little interval that occurs in 
their domestic employments. If a Swiss woman 
goes to fetch water from the fountain, or faggots 
from the wood, her burden is skilfully poised on 
her head, whilst her fingers busily ply the needles. 
But industrious as they are, the resources of the 
country are too limited to enable a father of a 
family to provide for all his children ; some of them 
are therefore obliged to emigrate, and seek their 
fortune in a foreign land, which offers greater re- 
sources to their industry. Hence the number of 
Swiss merchants, governesses, shopkeepers, and 
servants, that are to be met with in almost all 
countries: would not these people be happier if 
they found means of exercising their industry and 
their talents in a country to which they are all so 
much attached, and which they have so much rea- 
son to love. In the energy of youthful vigour men 
may often quit their own country, and live happily 
in a foreign land ; but enquire of the parents who 
are on the point of separating from their children 


as soon as they have attained the hopeful age of 
manhood, whether their country would be less 
liappy for offering them the means of employment 
and maintenance at home. 

The Swiss cannot afford to support a standing 
army for the defence of their territory ; they arc 
therefore under the necessity of engaging their 
troops in the service of foreign potentates, in order 
to provide for a part of their population, and to 
have a resource by calling them home in times of 
danger. Would not these soldiers be happier in 
defending their own country, than in shedding their 
blood as mercenaries in the cause of foreigners? 
We have a remarkable proof of it, in the effect 
which their patriotic songs are said to produce on 
them ; when these simple airs recal to their minds 
their beloved and regretted country, it either drives 
them to desertion, or renders their lives misei'able ; 
and so deep is the impression made by these na- 
tional airs, that it was found necessary to forbid 
their being sung by the troops in foreign service. 


There is no withstanding your attacks, Mrs. B. 
You drive me from all my strong holds. I ex- 
pected to have found a safe asylum in the moun- 
tains of Switzerland, but I see that I must once 
more take refuge in London, where I am sure you 
will admit that the contrast between the luxuries of 


the rich and the wretchedness of the poor is shock- 
ing to every person of common feeling. 

MRS. B. 

If the wretchedness of the poor were the effect of 
the luxuries of the rich, I should certainly agree 
with you on that point ; but I believe it to be other- 
wise. However, as the people, whose progress 
towards wealth and civilisation we have been tracing 
in our two last conversations, are yet far from being 
sufficiently advanced in their career to be guilty of 
any great excess in luxury, we must patiently follow 
them in their advancement in knowledge and the 
acquisition of wealth before wc treat of the subject 
of luxury. 

( «7 ) 








MRS. B. 

We have ascertained that the establishment and 
security of property were the chief causes of the 
emancipation of mankind from the shackles of sloth 
and ignorance ; but there are other subordinate 
causes which tend greatly to promote the progress 
of industry and civilisation. The first of these is 
the introduction of exchange or barter. 

We observed that when men found they could 
place u reliance on the security of their possessions^ 


they laboured with redoubled activity, and far from 
being satisfied with a scanty and temporary main- 
tenance, they provide for the future, they accumu- 
late a little store not only of the necessaries, but of 
the comforts and conveniencics of life. The one 
has a stock of arrows for the chace, another of 
provisions for the winter, a third of clothes or or- 
naments for his person, lliey will remain in undis- 
turbed possession of this little property ; but those 
who can no longer obtain it by force or fraud will 
endeavour to procure it by other means. In the 
hunting season they will apply to the fabricator 
of arrows; but they will not go to him with 
empty hands ; they must be provided with some- 
thing to offer in exchange for the arrows, some- 
thing which they think will tempt him to part 
with them ; whilst those who have nothing to 
give in return will wish in vain to obtain 

Here then is a new incitement to a spirit of in- 
dustry. Whoever has accumulated more than he 
wants of any commodity, may find means of ex- 
changing the surplus for something that will gratify 
other desires. As objects of desire increase, the 
wish to possess and the effort to obtain them increase 
also; and the industry of man is exerted either in 
producing them himself, or in producing something 
by means of which he may obtain them. Thus the 
torpid apathy and languid indolence of a savage 


yields to the curiosity, the admiration, the desire, 
the activity, and industry of a civihsed being. 

Tlie man, for instance, who first cultivates a little 
spot of ground, may be said to produce in time a 
general harvest ; not only by introducing the art of 
tillage, but by the powerful impulse which it gives 
to industry in general. He cannot himself con- 
sume the whole produce of his little garden, but he 
exchanges the surplus for other things of which he 
stands in need. 


Besides, he would not have had sufficient time 
to bestow on the cultivation of his garden, if he 
had been, at the same time, obliged to provide 
for all his other wants. 

MRS. B. 

Very true ; those therefore who mean to partake 
of the fruits of his gai'den must contribute towards 
the supply of those other wants ; some will bring 
him fish from the river, others game from the 
woods ; when his immediate necessities are supplied 
lie will be induced to exchange his vegetables for 
articles of conveniency, such as baskets to contain 
his fruit, or some of the rude implements of hus- 
bandry; or he may finally be tempted to part with 
some for mere luxuries, such as rare shells, feathers, 
and other personal ornaments. His neighbours 


will therefore be eager to produce or procure ar- 
ticles, which, either from necessity, conveniency, or 
merely from pleasure, will induce the gardener to 
part with the produce of his garden ; for this pur- 
pose invention will be stimulated, new commodities 
will be fabricated, skill will be acquired, and ii 
general spirit of industry developed. 


So far the introduction of barter seems to an- 
swer a very useful purpose; but when once industry 
is roused, why should not every one exert his abili- 
ties to supply his own wants, and gratify his de- 
sires, without the intervention of barter? If a man 
happens to be possessed of a superfluous quantity 
of any commodity, it is no doubt desirable to ex- 
change it for something more wanted : but it seems 
to me to be an unnatural and circuitous mode of 
proceeding, to produce something which we do not 
want, in order afterwards to exchange it for some- 
thing which wc do want. 

MRS. B. 

Would you then have the baker kill his own 
rneat as well as bake his own bread, brew his own 
beer, build liis own house, and make his own 
clothes, instead of procuring these various article;- 
in exchange through the sale of his bread? 



Oh no, it would be impossible to undertake so 
many occupations ; and then he can do one thing 
better than he can do many : but this separation of 
trades and employments cannot take place in a 
savage state. 

MRS. B. 

No, but it begins to operate as soon as barter is 
introduced ; and it is to this circuitous mode that 
we owe all our improvements in skill and dexterity ; 
the advantages of which are much more important 
than you imagine. 

When barter became common, it was soon dis- 
covered that the more a man confined Jiimself to 
any one single branch of industry, to the fabri- 
cation of bows and arrows for instance, the greater 
the skill and dexterity he acquired in that particu- 
lar art; so that he could make bows and arrows 
not only quicker, but of better workmanship than 
another man who followed a variety of pursuits. 


Now 1 begm to understand the advantage that 
results from barter, independently of its inspiring 
a spirit of industry and a taste for a variety of en- 
joyments. The artist who has acquired a superior 
degree of excellence in the fabrication of bows and 
arrows, would gain more, by confining himself 
entirely to that occupation, and txclianging his 


merchandize for whatever else he was desirous ot 
obtaining than by turning his attention to a variety 
of pursuits. 

MRS. B. 

No doubt he would, provided he were sure of 
being able to dispose of all the bows and arrows he 
could make ; for it would be useless to fabricate 
more than he could sell or exchange; and as no 
one could become a purchaser unless he had some- 
thing to offer in return, a long period of time must 
elapse before the progress of industry would create 
a sufficient number of purchasers to enable an indi- 
vidual to earn a livelihood by the fabrication of 
bows and arrows. 

It is therefore only in a more advanced stage of 
society that the demand for commodities is so great 
that men find it advantageous to devote themselves 
wholly to one particular art. 

Adam Smith observes, that " in lone houses and 
*' very small villages which are scattered about in 
" so desert a country as the Highlands of Scotland, 
" every farmer must be butcher, baker, and brewer 
" for his own family. In such situations we can 
»* scarcely expect to find even a smith, a caqienter, 
" or a mason within less than twenty miles of an- 
'• other of the same trade. The scattered families 
*' that live at eight or ten miles distant from the 
" nearest of them, must learn to perform for thera- 
" selves a great number of little pieces of work, for 


** which, in more populous countries, they call in 
** the assistance of these workmen." 

Tliis separation of employments, which, in poli- 
tical economy, is called the division of labour^ can 
take place only in civilised countries. In the flou- 
rishing states of Europe we find men not only 
exclusively engaged in the exercises of one particular 
art, but that art subdivided into numerous branches, 
each of wliich forms a distinct occupation for dif- 
ff-'rent workmen. 

Here is a beautiful passage in Adam Smith, the 
merits of wliich you will now be able to appreciate. 

t'AROLiN'E reads. 
" Observe the accommodation of the most com- 
"•* mon artificer or day-labourer in a civilised and 
'" thriving country, and you will perceive that the 
'• mniiber of people of whose industry a part, 
" though but a small part, has been employed in 
*' procuring him this accommodation, exceeds all 
" computation. The woollen coat, for example, 
'• which covers the day-labourer, as coarse and 
'' rough as it may appear, is the produce of the 
" joint labour of a great mullitude of workmen. 
" The shepherd, the sorter of the wool, the wooi- 
" comber or carder, the dyer, the scribbler, the 
" spinner, the weaver, the fuller, the dresser, with 
" many others, nmst all join their different arts in 
" order to complete even this homely production. 



" How many merchants and carriers, besides, must 
" have been employed in transporting the materials 
*' from some of those workmen to others who often 
" live in a very distant part of the country ! How 
*' much commerce and navigation in particular, 
*' how many ship-builders, sailors, sail-makers, 
*' rope-makers, must liave been employed in order 
** to bring together the different drugs made use 
" of by the dyer, which often come from the re- 
" motest corners of the world ! What a variety of 
*' labour too is necessary in order to produce the 
*' tools of the meanest of those workmen ! To say 
*' nothing of such coni{)licated machines as the ship 
*' of the sailor, the mill of the fuller, .or even the 
*' loom of the weaver, let us consider only what a 
** variety of labour is requisite in order to form that 
*' very simple machine, the shears with which the 
*' shepherd clips the wool. The miner, the builder 
*' of the furnace for heating the ore, the seller of 
" the timber, the burner of the charcoal to be made 
*' use of in the smelting-housc, the brickmaker, the 
*' bricklayer, the workmen who attend the furnace, 
** the mill-wright, the forger, the smith, must all of 
*' them join their different arts in order to produce 
" them. Were we to examine, in the same man- 
*' ner, all the different parts of his dress and house- 
" hold furniture, the coarse linen shirt which he 
** wears next his skin, the shoes which cover his 
" feet, the bed which he lies on, and all the differ- 


** cut parts which compose it, the kitchen-grate, at 
** which he prepares his victuals, the coals which 
*' he makes use of for that purpose, dug from the 
" bowels of the earth, and brought to him by a long 
" sea and a long land carriage, all the other uten- 
" sils of his kitchen, all the furniture of his table, 
" the knives and forks, the earthen or pewter plates 
" upon which he serves up and divides his victuals, 
" the different hands employed in preparing liis 
" bread and his beer, the glass window wliich lets 
" in tlie heat and the liglit, and keeps out the wind 
" and rain, with all the knowledge and art requisite 
" for preparing that beautiful and happy invention, 
*' without which these northern parts of the world 
<' could scarce have afforded a very comfortable 
" habitation, together with the tools of all the dif- 
" ferent workmen employed in producing those 
" different conveniences ; if we examine, I say, all 
" these things, and consider what a variety of la- 
" bour is employed about each of them, we shall 
" be sensible that without the assistance and co- 
*' operation of many thousands, the very meanest 
" person in a civilised country could not be pro- 
" vided, even according to what we very falsely 
" imagine the easy and simple manner in which lie 
" is commonly accommodated. Compared, indeed, 
" with the more extravagant luxury of the great, 
" his accommodation must no doubt appear ex- 
" tiemely simple and easy ; and yet it may be true, 
E 2 


^' perhaps, that the accommodation of an European 
" prince does not always so much exceed that of" an 
" industrious and frugal peasant, as the accommo- 
" dation o)' the latter exceeds that of many an 
" African king, the absolute master of the lives 
'• and liberties of ten thousand naked savoges." 

It is very true, certainly; and it reminds mc ol 
an observation ('f Dr. Johnson in the Rambler, 
" That not a was^herwoniiui s-its down to break- 
" fast, without tea from the East Indies, and sugar 
" from the West." 

I now comprthciul your rclerencc U) the little 
story of the cherry-orchard : it was by dividing 
amongst the children the different parts of the pio- 
ccss of plaiting slravi-, that they succeeded so much 
better than the boy who was kfi to perform the 
whole of his i)lait alone. 

MRS. c. 
I will now point out to ycu some examples re- 
marked by Adam S'niitli in illustration of the be- 
nefits derived from the division of labour. That 
of the pin-manufactory I shall give you in his own 
words. He observes, that " A woikman not edu- 
" cated to this business, nor acquainted with the 
" use of the machinery employed in it, could 
" scarce, perhaps, with liis utmost industry, make 
" one pin in a day, and certainly could not make 
" twenty. But in the way in which this business 


•* is now carried on, not only the whole work is a 
*• peculiar trade, but it is divided into a number of 
*• branches, of which the greater part are likewise 
•' peculiar trades. One man draws out the wire, 
*• another straightens it, a third cuts it, a fourth 
" points it, a fifth grinds it at the top for receiv- 
*' ing the head. To make the head requires two or 
" three distinct operations ; to put it on is a pecu- 
" liar business, to whiten the pins is another ; it is 
" even a trade by itself to put them into the 
'• paper ; and the important business of making a 
" pin is, in this manner, divided into about 
*' eighteen distinct operations, which, in some ma- 
'* iiutactorics, are all performed by distinct hands, 
*' though in others the same man will sometimes 
" perform two or three of them. I have seen a 
" small manufactory of this kind where ten men 
" only were employed, and where some of them 
*' consequently performed two or three distinct 
" operations : but though they were very poor, 
'' and therefore but indifferently accommodated 
*' with the necessary machinery, they could, when 
" they exerted themselves, make among them 
*' about twelve pounds of pins in a day. There 
*' are in a pound upwards of four thousand pins 
" of a middling size. Those ten persons, thcre- 
*• fore, could make among them upwards of forty- 
-• eight thousand pins in a day. Each person, 
therefore, making a tenth part of forty-eight 
E 3 



" thousand pins, might be considered as making 
*' four thousand eight hundred pins in a day. But 
" if they had all wrought separately and inde- 
" pendently, and without any of them having been 
*' educated to this peculiar business, they certainly 
*' could not each of them have made twenty, per- 
*' haps not one pin in a day ; that is, certainly, 
" not the two hundred and fortieth, perhaps not 
*' the four thousand eight hundredth part of what 
<' they are at present capable of performing, in 
" consequence of a proper division and combin- 
*' ation of their different operations." 


These effects of the division of labour are really 
wonderful ! 

MRS. B. 

The instance which Adam Smith quotes in proof 
of the dexterity acquired by men, whose labour is 
reduced to one simple operation, is also very strik- 
innr. After observing that a man unaccustomed to 
a blacksmith's forge can with difficulty make three 
hundred nails in a day, he says that a common black- 
smith can forge one thousand, but that he has seen 
boys v/ho have been brought up to the art of nail- 
making exclusively, acquire such a degree of dex- 
terity as to complete two thousand three hundred 
in a day. 



The difference is prodigious : but I can on- 
ccive it when I observe with what awkwardness 
a man handles tlie tools of an art with which he is 
unacciuainted, whilst they are used with ease and 
dexterity by those who are accustomed to them. 

MRS. B. 

Tiien we must consider that when a man's whole 
attention and talents are turned to one particular 
object, there is a much greater probability of his 
discovering means of improving his workmanship, 
or facilitating and abridging his labour, than if his 
mind were engaged in a variety of pursuits. It is 
most frequently to workmen, that we are indebted 
for improvements in the process and instruments 
of labour. 

Another advantage derived from the division of 
labour is the regular and uninterrupted manner in 
which it enables tiie work to proceed. A labourer 
who has many diversified occupations not only 
loses time in going from one to another, but 
also in settling himself to his different employ- 
ments ; and as soon as his hand is in, as the 
workmen say, he must quit his work to take up 
another totally different. Thus he must go from 
his plough to his loom, from his loom to his forgo, 
from his forge to his mill, — but no — there could 
be neither plough, nor loom, nor forge, nor mill, 
E 4 


before a divisicm of labour had taken jilnce; Ibr 
no man could cither find time or acquire skill to 
construct such machines, unless they could bestow 
tlie whole of their labour and attention upon them. 
The construction of machines, therefore, we may 
consider as a refined branch of the division of labour. 
Their effect in facilitating and abridging labour is; 
almost incredible. How easy, for instance, the 
operation of grinding corn is rendered by so simple 
a machine as a windmill ! Were this to be done 
by manual labour, by bruising it between stones, 
it would be almost an endless task; whilst in a 
windmill the natural motion of the air performs 
nearly the whole of the work. 


But the cotton-mills we have lately seen are a 
much more wonderful example of the effect of ma- 
chinery. In these a steam-engine sets all the 
wheels and spindles in motion, and performs the 
work of hundreds of people. 

MRS. B. 

The great efficacy of machinery in the hands of 
man depends upon the art of compelling natural 
agents, such as wind, steam, and water, to per- 
form the task which he would otherwise be obliged 
to execute himself; by which means labour is very 
much abridged, a great deal of human effort is 



savoil, and tlie work is often accomplished in a more 
uniform and accurate manner. 

\Vc noticed the skill that coukl be acquired in 
the art of forging nails: but the utmost efforts of 
manual labour fall far short of machineiy. A ma- 
chine lias been invented in the United States of 
America for the purpose of cutting nails out of 
iron, the operation of which is so rapid that it forms 
250 perfect nails in the space of one minute, or 
15,000 in an hour. 


The metals, I suppose, could not have been 
lirought into use, till a considerable progress had 
been made in the division of labour? 

MRS. B. 

Certainly not; for it recjuires the exclusive la- 
bour of a great number of men to work a mine. 
The Mexicans and Peruvians in America, though 
they had made some progress towards civilisation, 
had never sought for gold in the bowels of the 
earth, but contented themselves with what they 
could pick up in the beds of rivers. In Britain, 
the Cornish mines were worked in very ancient 
times, and it is even supposed that the Plioenicians 
had introduced this art among the ancient Britons, 
with whom they are said to have tialHcked Ibr tin 
ind other metals. 

E 5 

i^- ON riu: division of labour. 


I am perfectly satisfied that the division of labour 
is a necessary step towards the accumulation of na- 
tional wealth : but may it not have an injurious cfibct 
on the mental faculties of individuals? A man who 
is confined to one simple mechanical operation, how- 
ever oreat the facility and perfection he may acquire 
in the performance of it, is shut out from all other 
improvement; his mind will never be roused to 
exertion by difliculty, interested b}' variety, or en- 
lightened by comparison. His ideas will be con- 
fined within the narrow limits of his monotonous 
employment, and his rational powers will become 
so degraded as to render him scarcely superior to 
the macliinery at which he works. Whilst a com- 
mon husbandman, whose occupations are diver- 
sified, and but little aided by machinery, acquires 
knowledge by experience in his various employ- 
ments, and, having a much wider range of observ- 
ation, enjoys a corresponding development of 

MRS. B. 

The knowledge of a ploughman is often remark- 
ably distinct in his limited sphere; but yet I have 
usually found that in conversing upon general topics 
with ^ ploughman and with a mechanic, the latter 
has dis^vered more intelligence, and that his mind 
lias appeared more active and accustomed to reflec- 
lion. I conceive this to be owing to the facility 


which the arts aflbrcl of bringing men together in 
society. Tlicy are carried on in towns, where 
neighbourhood renders social intercourse much 
more easy than in scattered liamlets in the country. 
\Vlien they meet together tliey talk over each 
other's concerns, read the newspapers, and discuss 
the politics of the parish, or of the state. This 
observation is particularly ap{)licable to manufac- 
tories, where a number of persons generally work 
together in the same room, and their employment 
seldom prevents conversation. Social intercourse, 
in whatever class of the community it takes place, 
cannot lUil to promote the diffusion of knowledge; 
they become acquainted with the comforts and 
conveniences which have been acquired by the 
more skilful and industrious; they learn to appre- 
ciate the value, and are stimulated to acquire 
the means of obtaining them ; a mode of instruc- 
tion which we have observed to be the most 
essential step towards dispelling ignorance, and ex- 
citing industry. 


But is there not some danger that the advantages 
obtained in the improvement of the mind by this 
state of constant intercourse amongst the lower 
classes in manufacturing towns, will be more than 
counterbalanced by the corruption of morals ? How 
much more vice appears to prevail amongst the 
E 6 


lower orders in crowded cities, than in the cot- 
tages of the peasantry I 

MRS. B. 

You do not consider the difference of the pojiu- 
lation ; there are often a greater number of people 
collected toijether in a manufacturinsr town than 
there are scattered over a space of thirty square 
miles of country : were their morals, therefore, the 
same, vice would appear much more conspicuous 
in the town than in the country. Admitting, how- 
ever, the comparative amount of crimes to bo 
greater in the former, I believe that it is com{)eu- 
sated by a more considerable proportion of virtue. 


Vet you must allow that we hear nuich more oi 
the vices than of the virtues of manufacluriufr 
towns and great cities. 

MRS. B. 

Because crimes, from being amenable to the law.s, 
are necessarily made known, whilst virtue seldom 
receives any public testimony ot approbation. P^very 
act of fraud or violence is sounded in our ears, 
whilst the humanity, the sympathy foi- sufleriiigs, 
the sacrifices wiiich the jioor make to relieve each 
other's distresses, are known only to those who enter 
into their domestic concerns, -rhis has been fie- 


()uontly noticed by medical men wlid have attended 
the lower classes of people in sickness at their own 


Yet, upon the whole, do you not think that the 
situation of the poor in the country is better than 
it is in towns? 

MRS. B. 

They have each their advantages and disadvan- 
tages, and I should imagine that good and evil are 
pretty eciually balanced between them. If the inha- 
bitants of towns are better informed, and can more 
easily acquire some of the comforts of life, the in- 
Jiabitants of the country are more vigorous and 
liealthy, more cleanly, and they have the advantage 
of a more constant and re<jular demand for the 
produce of their labour, which is not so liable to 
be allcctcd by the casualties of war, fashion, and 
other causes, which oitcn occasions great distress 
to manufacturers. 

But should you still entertain any apprehension 
that the division of labour may check anil repress 
the intellectual improveuunt of the lower classes, 
1 should consider thi> as amply compensated by 
its prodigious effect in the nuillipliealion of wealth, 
a circumstance which not only increases the com- 
forts of the poor, but by facilitating the means 
of acquiring knowledge, ultimately promotes its 
diflfusion among all classes of men. It is to 


the division of labour that we are indebted for 
improvements in the processes of art, and amongst 
others for the invention of printiiif», which has 
proved the means of so wonderfully extending all 
kinds of knowledge. 

We have now, I think, brought our savages to a 
considerable degree of advancement in civilisation; 
I would wish you briefly to recapitulate the causes 
which have produced this happy change, and at 
our next interview we will continue to trace their 


Labour seems to be the natural and immediate 
cause of wealth ; but it will produce little more 
than the necessaries of life until its benefits are ex- 
tendetl by the establishment of such a government 
as can give security to property. The spirit of 
industry will then be rapidly developed. The sur- 
plus produce of one individual will be exchanged 
for that of another. The flicilities llius offered to 
barter will naturally introduce the division of la- 
bour or of employment ; and will soon give rise to 
the invention of machinery, the merits of which we 
have just discussed. 

MHS. B. 

Extremely well, Caroline. We shall now take 
leave of this improved state of society for the pre- 
sent, with a conviction, I hope, that we leave man- 
kind much hap})icr than we found it. 













MRS. B. 

In tracing tlic progress of society towards civilisa- 
tion, we noticed the happy effects resulting from 
tlie security of property and the division of labour. 


From til is period we may also elate the diversity o\ 
ranks, and the general distinction between rich and 


And all the evils that arise from inequality ot 
condition. This, alas ! is the dark side of the 

MRS. B. 

So far from viewing the diversity of rank and 
condition as an evil, I consider it as productive of 
much general benefit, as it is that state of society 
best calculated to stimulate the industry, and bring 
into action the various faculties of mankind. If it 
does not exist in a savage state, it is because indi- 
gence is universal ; for no one being able to acquire 
more than what is necessary for his immediate 
maintenance, every one is poor. When civilisa- 
tion takes place, the advantages arising from the 
security of property and the division of labour 
enable an industrious skilful man to acquire more 
■wealth than will suffice to gratify his wants or de- 
sires. By continued exertion this sur))lus produce 
of his industry in the course of time accumulates, 
and he becomes rich, whilst the less industrious, 
who acquires merely a daily subsistence, remains 
poor or possessed of nothing, and the idle are re- 
duced to positive indigence. 


I cannot perceive what advantage arises from the 


accumulation of wealth, for it must either be spent 
or hoarded; if spent, the iiuKistrious man is eventu- 
ally no richer than his idle neighbours ; and if 
I hoarded, the accumulation is of no use to any one. 

MRS. B. 

Your dilemma is put with some ingenuity, but 
you must at least allow that, where more is spent, 
there is a greater scope for enjoyment ; and in re- 
gard to hoarding, I hope you arc not recurring to 
vour notions about riches and money, and forget 
that the wealth of which we have been speaking 
consists of exchangeable connnodities, either agri- 
cultural or manufactured, many of which arc Jiot 
of a nature to be kept, were men inclined to hoard 
them. A much better mode of disposing of them 
has been devised ; one which not only secures, but 
augments them. 


What can that be ? 

MRS. B. 

This you will hardly understand without some 
previous explanation. 

In civilised society men cannot, sis in a state of 
nature, obtain a subsistence by hunting, or from 
the spontaneous produce of the earth ; because the 
wilderness has been destroyed by cultivation, and 
the land has become private property. 



And when the land is occupied by the rich, 
there seems to be no resource left for the poor ? 

iMRS. B. 

What do you suppose the rich do with their 
wealth r 


The poor, I am sure, partake but little of it, for 
the sums the most charitable give away are but 
trifling compared to what they spend upon them- 

MRS. B. 

I am far from wishing that the ])oor should be 
dependent on the cliarity of the rich for a subsis- 
tence. Is there no other mode of partaking of 
their wealth but as beggars ? 


Not that I know of, unless by stealing. Oh no, 
I guess now — you mean they may earn it by their 
labour ? 

MRS. B. 

Certainly. The poor man may be supposed to 
say to the rich one, " You have more than you 
want, whilst I am destitute. Give mc some little 
share of your wealth for a subsistence; I have 
nothing to offer in exchange but my labour ; but 
with that I will undertake to procure you more than 


you part with — if you will maintain mc, I will 
work for you." 


But is it not usual to pay wages to labourers in- 
stead of maintaining them ? 

MRS. B. 

It i3 in effect the same ; for the wages purchase 
a maintenance; the money merely represents the 
things of wliich the labourer stands in need, and 
for which he may exchange it. 


The labourer may then be supposed to say to 
the rich man, " Give me food and clothing, and 
I by my labour will produce for you other things 
in return." 

• MRS. B. 

Precisely ; the rich man exchanges with the la- 
l)ourer the produce or work that is already done, 
for work that is yet to be done. It is thus that he 
acquires a command over the labour of the poor, 
and increases his wealth by the profits he derives 
from it. 


This is a resource for the poor, I own ; but not 
enough to satisfy me entirely, for they are left at 
the mercy of the rich, and if these did not clioos;e to 
employ them, they would starve. 

9J ON. rAlMTAl,. 

MRS. B. 

True; but what could the licli do without llieir 
assistaiici- ? 


Tlieir ucallh woultl furnisli thcni a plentiful sub- 

MRS. B. 

At first it might, but in time it would be con- 
sumed. Their harvebts and their cattle would be 
eaten, their clotlics worn out, antl tlieir houses 
fallen into decay. 


But you know that the harvests are annually re- 
produced, new clothes are purchased, and houses 
repaired or rebuilt: riches easily obtain all tliese 

MRS. B. 

But who is it that rc-produces tlie harvests? 
Who manufactures new clothes, and builds new 
houses, but the poorer classes of men ? V/ithout 
their aid you could spend only what you actually 
possessed, and when it was gone you would be 


True; that is an idea that often })erplexed me 
when I was a child. I thought that in jiroportion 
as my father spent his money he must be impo- 
verished; but now I understand that wealth is re- 
produced by the labour of the poor, and that 
ihence arises an annual income. 

ox CAPITAL. 93 

MRS. I!. 

l\ the value protluced by the hiboiirer excccd> 
what he has coiisuniocl, tlic excess will constitute 
an income to his employer ; and observe, that an 
income can be obtained by no other means than by 
the employment of the poor. 


Indeed, I was perfectly aware that it was neces- 
5-ary to employ labourers for this purpose; but I cUd 
not consider that it created reciprocity of benefit, 
by rendering llie poor in a gieat mcabure indepen- 
dent of the will of the rich. 

-MRS. 15. 

The rich and poor are necessary to each other; 
it is precisely the fable of the belly and the limbs; 
without the rich the poor would starve; without 
the poor the rich would be compellcil to labour for 
iheir own subsistence. 


It is very true, Mrs. 13.; and this is, 1 suppose, 
what you alluded to, vAwix you said that the rich 
had a means of securing their wealth \\ithout 
hoarding it. 


Yes ; the labouring classes consume and re- 
produce it. Wealth, thus destined for rc-produc- 


tion by the employment of labourers, is called 
capital. You have heard of capital before, no 
doubt ? 


Oh yes; a man of fortune is said to be a man of 
capital : I always considered these as synonimous 

MRS. B. 

So they are ; and you may have heard also that 
to spend a capital is very ruinous ; that it should be 
placed in some profitable line, so as to yield an in- 
come ; that is to say, it must be employed to set 
labourers to work, and the profit derived from their 
labour is called revenue or income. 


If capital is employed in paying the wages of 
labourers, it is spent and consumed by them, and 
is lost to the capitalist as much as if he spent it. 

MRS. B. 

No ; capital employed is consumed, but not de- 
stroyed : it is at least no more destroyed than the 
seed sown in the ground, which is re-produced with 
increase. Thus the capital consumed by labourers 
is re-produced with increased value in the articles 
of their workmanship. 


I know that a capital produces an income ; and 


thiuk 1 have a clear idea how this is effected. Yet 
I have some scruples respecting the mode of ob- 
taining it, which I am not altogether able to re- 
move. If the labourer re-produces for the capi- 
talist only as much as he consumes, or, in other 
words, commodities equal in ralue to his wages, 
the income is only equivalent to the oiit-gomg ,- he 
restores therefore exactly what the capitalist has 
advanced him, the latter being neither a loser nor 
a gainer by the bargain ; any farther, at least, 
than that, by re-production, perishable produce is 
made to last ; and that if more is produced, it 
seems but fair that the labourer should have the 
whole of his earnings. 

MRS. B. 

No capitalist would consent to such an agree- 
ment. When the poor man applies to the rich one 
for a maintenance, offering his labour in return, he 
does not say — for the food you give me during the 
present year, I will produce an equal quantity of 
food next year — because he knows that he would 
not be employed on such terms ; he must by the 
prospect of some advantage induce the capitalist to 
exchange food that is already produced for some- 
thing that is yet to be produced. He therefore says 
— for the food you give me now, I will raise you a 
greater or more valuable supply next year. 



It appears to me a liardship, notwithstaiuliiig, 
that after the rich have engrossed the whole prt)- 
pcrty of the land, nothing should be left to the |)oor 
beyond their own labour, and that they should m^t 
be allowed to reap the whole of the advantages it 
affords. If 1 were a legislator, I should be disposed 
at all events to establish a law compelling the ca- 
pitalist to allow the labourer the whole of the pi-ofit 
arising from his work. Such a regulation would 
surely tend to improve the condition of the jioor. 
You smile, Mrs. B., I am afraid you will not allow 
of my plan? 

-MRS. B. 

I would suggest an addition to it, which is a 
law to compel the capitalist to employ the labourers ; 
for on your terms none would give them work. 
The farmer, were he obliged to j);iy his husband- 
men the value of the crojis they raiseil, would ile- 
rive no pi-ofit from their sale; he would, therefore, 
leave his fields uncultivated, the land would lie 
waste, and the hu.-baudnicn starve. INIanufaclurers 
for the sauie reason would discharge their work- 
men, merchants their clerks; in a word, industry 
would be paralyzed ; and were you to devise a 
system of certain and inevitable ruin to a country, 
I do not think you could adopt a more efficacious 
mode of promoting your design. 



So much for the wisdom of my laws ! I cer- 
tainly ought to have foreseen these consequences, 
since, as you observed before, the inducement for 
the rich to employ the poor is the advantage the 
former derive from the latter. 

MRS. fi. 

Undoubtedly. The profits the rich reap from 
the employment of their capital constitutes their 
income; without such income the capital, it is 
true, might, by your compulsatory laws, be re- 
produced annually; but yielding no income, the 
capitalist would gradually consume it in the main- 
tenance of his family; and thus his means of em- 
ploying labourers would annually diminish. 

So far from considering the profits which the 
capitalist derives from his labourers as an evil, 1 
have always thought it one of the most beneficent 
ordiuations of Providence, that the employment of 
the poor should be a necessary step to the increase 
of the wealth of the rich. 

Thus the rich man has the mcauK of augmenting 
his capiUil, not by hoarding, but by distributing it 
among hi? labourers, wjio consume it, and re- 
produce another and a larger capital — hence have 
they obtained the name of productive labourers. 



When a man, therefore, becomes po.s.sf.>i;'ccl ol w 
capital, whether by accuniuhition of his savings or 
by inheritance, it is no longer requisite for him to 
work for a maintenance, as others will labour for 

MRS. B. 

It depends on the amount of his capital, and 
the extent of his desires. If it will yield an income 
sufficient to maintain him and his family with the 
degree of comfort or affluence which satisfies his 
ambition, he may live in idleness ; if not, he will 
work himself; or at least superintend his labourers. 
This is the case with the fiirmer, the merchant, 
the master-manufacturer, each of whom super- 
intends his respective concerns. 

Do you understand now, that no productive en- 
terprise can be undertaken without capital ? Ca- 
pital is necessary to pay labourers, to purchase 
materials to work upon, instruments to work with ; 
in short, to defray the whole expense attached to 
the employment of labourers. 


But a man may undertake a productive enter- 
prise without employing labourers: for instance, if 
he gathers mushrooms on a common, he requires no 
capital for that purpose ; no tools are used, the 
earth produces mushrooms spontaneously, and 

12 , 


every one has a light to gather them. The same 
may be said of nuts and wild strawberries. 

MRS. B. 

These are small remnants of the resources of a 
savage state, in which subsistence is derived from 
the spontaneous produce of the earth: but the 
employments which require no capital, are very in- 
considerable, and occur only during a short season 
of the year. 


There is one, which appears to me of great Im- 
portance — fishing. Fishermen are in no want of 
captal ; the fish costs them merely the trouble of 
catching. Oh no ! I am mistaken ; I forgot the 
nets and the boats that are necessary for fishing ; 
besides, the men must have something to subsist 
on, when the weather will not allow them to venture 
on the water. 

But there is another case, Mrs. B. ; I have 

own persons who were worth nothing, and yet 

o set up in business on credit. 

MRS. B. 

That is no exception ; for credit is the employ- 
citnt of tlie capital belonging to another. 


Well, it is a melancholy reflection that one must 
¥ 2 

100 ON CAl'Il AL. 

always possess something in order to gain more. 
He then who has nothing to begin with, has no 
means of escaping from poverty. 

MRS. B. 

Poverty is a word of vague signification. If you 
mean to express it by a state of positive indigence, 
the labourer who earns a subsistence from day to 
day cannot come under that description. But if 
you use the word poverty in opposition to wealth, 
that is to say, to the possession of capital, labourers, 
though usually in that state, are not necessarily 
condemned to it. A healthy and hard-working 
man may, if he be economical, almost always lay 
aside something as the beginning of a little capital, 
which by additional savings accumulates. 


That is true. Thomas, our undcr-gardener, 
who is a very intelligent, industrious man, was 
saying the other day to one of his fellow-labourers, 
that as soon as he had laid by a little money to begin 
the world with, he intended to marry. But it 
seems to me that if my father would give him a 
cottage, and an acre or two of ground, he might 
raise vegetables for market, and by these means 
support himself and his family. 

MRS. fi. 
In that case your father would supply the capital. 



The cottage and the land is a capital, but they will 
not do alone. Thomas would besides require 
garden tools to work with, and an assistant, if not 
several, to prepare the ground. Then he must not 
only subsist himself, but maintain his family till the 
produce of his garden can be brought to market. 
In the course of three or four years, from the 
earnings of his daily labour he may have amassed 
a little capital sufficient to enable him to under- 
take this ; he will then no longer be a labourer for 
hire, but will work on his own account. It is thus 
every thing has a beginning ; the largest fortunes 
have often had no greater origin. 

Now, supposing Thomas to be able to rent an 
acre of land when he is worth lOo/., hf- may reiit 
ten acres when he is worth 1000/., but he cannot 
rent more ; he cannot increase his farm, beyond his 
means of paying for it ; his industry, therefore, is 
limited by the extent of his capital. 


I do not quite understand that 

MRS. B. 

Let us imagine a tradesman, a shoe-maker for 
instance, to be master of a capital which will en- 
able him to maintain ten workmen, and that the 
following year he finds that he has gained 100/. 
by the profits derived from their labour. This 
F .i 


100/. constitutes his income; if he spend it, his 
capital remains what it was before : but if he adds 
it to his capital it will enable him to maintain and 
provide work for a greater number of journeymen. 
Let us say that he can now employ twelve instead 
of ten men ; these will make him a greater quan- 
tity of shoes, and the additional profits arising 
from their sale will, if added to his capital, still 
farthex" increase his means of employing workmen. 
Thus the demand for labour, or, in other words, 
employment for the poor, will ever increase with 
the increase of capital, and be limited only by its 


But we must not forget that the master shoe-maker 
and his family are to be maintained out of these 
profits ; the whole of thtm cannot, therefore, be 
added to his capital. 

MRS. B. 

Certainly not. The expenses of his family con- 
sume, in general, by far the greater part of a man's 
income ; but, if he is puudent, he wiU lay aside as 
much as can be spared, and these savings will enable 
bim to enlarge and improve his business, of what- 
ever description it may be. 


Thus a fai'mer would be able to extend and im- 


prove the cultivation of his farm by increasing the 
nnmber of his labourers — and a merciiant propor- 
tionally to extend his commercial dealings — so that 
the richer a man becomes, the more it will be in his 
power to increase his wealth ? 

MRS. B. 

Yes ; the second thousand pounds is often ac- 
quired with less diflficulty than the first hundred. 


That is hard upon those who have nothing. The 
i ich have too many advantages over the poor. 

MRS. B. 

The man who accumulates a large fortune by his 
industry injures no one ; on the contrary, he con- 
fers a benefit on the community. You will under- 
stand this better by-and-by. In the mean time I 
must observe to you, that happiness, so far as it 
is dependant on wealth, consists less in the pos- 
session of riches than in the pleasure of acquiring 
them. Every degree of increasing prosperity is at- 
tended with its enjoyment. Your gardener, who 
•^aves his earnings with the prospect of settling at 
the end of two or three years, has probably more 
satisfaction in the anticipation of his future wealth 
than he will have in the possession of it ; iis long 
as he continues making annual additions to his ai- 
F 4 


pltal, the same source of enjoyment wiH be pre* 
served, but will never excite so strong an interest 
as at first. Merchants will tell you that their 
first gains gave tltem greater pleasure than all 
their subsequent accumulations. Nature has wisely 
attached happiness to tin? gradual acquisition, ra- 
ther than to the actual possession of wealth, thus 
rendering it an incitement to industry; and we 
shall hereafter see that this progressive state of 
prosperity is most conducive also to the happiness 
of nations. 


ON CAPITAL— contimied. 







MRS. B. 

I HAVE some further remarks to make to you 
on the nature of capital. 

A land-owner, when he increases his wealth by 
savings from his income, may probably, instead of 
employing the whole of his additional capital on 
husbandmen, find it more advantageous to lay out 
some part of it on workmen to build barns and 
outhouses, to store his crops and shelter his cattle ; 

F 5 

106 ON CAl'lTAL. 

he may plant trees to produce timber, build cot- 
tages, and bring into cultivation some of the waste 
land on his farm. 

A manufacturer also, in proportion as he in- 
creases the number of his workmen, must enlarge 
his machinery or implements of industry. 


But the capital laid out in buildings, tools, and 
machinery will not yield a profit like that which 
is employed in the payment of workmen, the pro- 
duce of whose labour is brought to market ? 

MRS. B. 

The farmer and manufacturer would not lay out 
tlieir capital in this way, did they not expect to reap 
a profit from it. If a farmer has no barn or granary 
for his corn, he will be compelled to sell his crops 
immediately after the harvest, although he might 
probably dispose of them to greater advantage by 
keeping them some time longer. So a manufac- 
turer, by improving or enlarging his machinery, 
can, with less labour, perform a greater quantity of 
work, and his profits will be proportionate. 

Thus, for instance, when a manufacturer can 
afford to establish a steam-engine, and employ a 
stream of vapour as a substitute for the labour of 
men and horses, he saves the expense of more than 
half the number of hands he before employed. 


The capital laid out in this manner is called 
fxed capital ; because it becomes fixed, either in 
land, in buildings, in machinery or implements of 
art ; it is by keeping this capital in possession, and 
usijig it, that it produces an income. Whilst the 
capital employed in the maintenance of productive 
labourers, whose work is sold and affords an im- 
mediate profit, is distinguished by the name of 
circulating capital. 

The produce of a farm, or the goods of a manu- 
facturer, afford no profit until they arc brought to 
market, and sold or exciiangcd for other things. 
This description of capital is, therefore, constantly 
circulating. It is transferred first from the master 
to the labourer, in the form of wages and raw ma- 
terials, then from the labourer it is returned to the 
master, in the form of produce or workmanship of 
increased value ; but the latter does not realise his 
profits until this produce is sold to the public, by 
which it is consumed. 


I think 1 understand the difference between fixed 
and circulating capital perfectly. A farmer derives 
profit from his implements of husbandry by their 
use, while kept in his possession ; and from his 
crops by parting with them. But to which kind 
^)f capital should the farming cattle be rcfcnal ? 

F 6 


MRS. B. 

It depends upon the nature of thr cattle. Tlic 
value of the labouring cattle is fixed capital, like the 
implements of agriculture ; thus, the horses which 
draw the plough, as well as the plough itself, are 
fixed capital. But sheep and oxen intended for 
market are circulating capital. 


But should the plough be drawn by oxen, 
Mrs. B., how would you settle the point then? 
for whilst they labour for the farmer they are fixed 
capital ; but when they are sold to the butcher they 
become circulating capital. 

MRS. B. 

They alternately belong to each of these descrip- 
tions of capital; because the farmer makes his 
profit, first by keeping, and afterwards by selling 


I do not imderstand why you should call the 
maintenance of labouring men circulating capital, 
whilst you consider that of labouring cattle as fixed 
capital : they appear to me to be exactly similar. 

MRS. B. 

And so they are. The maintenance of cattle as 
well as that of labourers is circulating capital ; that 
maintenance is in both cases consumed and re- 


produced with advantage : it i8 therefore by parting 
with it that profits are derived. But the value of 
the cattle themselves is fixed capital, and if labour- 
ers, like cattle, were purchased, instead of being 
hired, thus becoming the property of their employ- 
ers, they also would be fixed capital. 


And this, I suppose, is the case with the poor 
Africans in the West Indies ? 

MRS. B. 

Yes, and with slaves of every description. Even 
the peasantry of Russia and Poland are in genei-al 
considered as fixed capital, because their state of 
vassalage is such as to amount to slavery, the pro^- 
prietors of the land having a right to their labour 
without remuneration : and the value of an estate 
in Russia is not estimated by the number of acres, 
but the number of slaves upon it ; in the same man- 
ner as a West-Indian plantation. A similar state 
of vassalage prevailed throughout most parts of 
Europe some centuries ago; but in later times the 
progress of civilisation has been such, that I believe 
every country, excepting Russia and Poland, has 
emancipated the labouring classes ; experience hav- 
ing proved that the more free and independent men 
are, the more industrious they become, and the 
better the land is cultivated. 



I wish that tlie West-Indian planters could be 
induced to adopt this opinion. 

MRS. B. 

Tlie time will no doubt arrive when slavery will 
be abolished in every civilised country. But im- 
portant changes ought not to be introduced without 
extreme caution. The minds of men should be 
freed from the degrading fetters of ignorance, be- 
fore they can reap advantage from personal eman- 
cipation. An ingenious author observes, " that 
liberty is an instrument with which men may either 
make their fortune or destroy themselves ; that they 
should therefore be taught the use of it before it is 
inti'usted to their hands." In all cases we shall 
find that gradual and progressive improvement is 
invariably conducive to the happiness of mankind, 
whilst sudden and violent revolutions are always 
attended with danger. But we ai*e deviating fi:om 
our subject. 


Well then, to return to it. I thought at first 
that I understood the difference of fixed and circu- 
lating capital perfectly; but I find upon reflection, 
that I am at a loss to determine to which kind of 
capital several articles of property belong. For 
instance, does the money laid out in the improve- 
ment of land constitute fi.\ed or circulating capital 1 


ON CAPITAL. 1 1 1 

MRS. B. 

The money laid out on waste land to bring it 
into a state fit for cultivation, such as inclosing, 
draining, ditching, preparing the soil, &c. ^is fixed 
capital ; and so is that which is employed in the 
improvement of land already cultivated. If it is 
the proprietor who lays out capital on land which 
he lets, he receives in remuneration an increase of 
rent : if the farmer, he makes greater profits. But 
the money laid out in the regular course of cultiva- 
tion, such as ploughing, sowing, reaping, &c., 
consists, as we have before observed, partly in fixed 
and partly in circulating capital. 


I must say that I prefer the employment of wealth 
in the form of circulating, rather than in that of 
fixed capital. Granaries, barns, machinery, &c. 
may be advantageous to the proprietors, but they 
must be injurious to the labouring classes; for the 
more a man lays out as fixed capital, the less re- 
mains to be employed as circulating capital, and 
therefore the fewer labourers he can maintain. 

MRS. B. 

You must always remember that the greatest 
good you can do the labouring classes, is to increase 
the consumable produce of the country. Whilst 
plenty of the necessaries of life is raised, it signifies 


little to whom it bclongn ; for whoever may be the 
proprietorn of" this wealth, tliey can derive no aii- 
vantago from it but by employing it ; that is to say, 
by maintaining with it productive labourers. The 
more abundant, thcjcfore, this wealth is, the more 
people will be employed. 

Now it is evident that whatever tends to improve 
or facilitate labour increases the protluctions of the 
country; and if fixed capital should eventually oc- 
casion the raising a greater protluce than circu- 
lating capital, it must be more beneficial to the 
labourers as well as to the capitalist. 


So it appears ; and yet I cannot understand how 
this operates with regard to machinery. We can- 
not substitute the powers of nature for human 
industry without throwing peoj)le out of work. 
How then can the poor derive any benefit from 
inventions and improvements which prevent their 
being employed ? 

MRS. B. 

It may ap})ear paradoxical, but it is nevertheless 
true, that whatever abridges and facilitates labour 
will eieyitiudlij increase the demand for labourers. 


Or, in other words, to turn people out of work is 
the most certain raeans of procuring them em- 



ploymcnt ! — This is precisely the objection I was 
making to the introduction of new macliincry. 

MRS. B. 

Tlie invention of machinery, I allow, is often 
attendee! with much partial and temporary inconve- 
nience and liardship ; but on the other hand, the 
advantages rcsultuig from it are almost incalculable 
both in extent and duration. When any new ma- 
chine or process whatever which abridges or facili- 
tates labour is atlopted, the commodity being 
produced at less expense falls in price, the low 
price enables a greater number of persons to become 
purchasers, the demand for it increases, and the 
supply augments in proportion ; so that it frequently 
happens that more hands are eventually employed 
in its fabrication than there were previous to the 
adoption of the new process. When, for instance, 
the machine for weaving stookings was first in- 
vented, it was considered as a severe hard.'-hip on 
those who hatl earned a maintenance by knitting 
them; but the superior facility with which stock- 
ings were made in the loom, rendered them so 
much cheaper, that those, who before were unable 
to purchase them, could now indulge in the com- 
fort of wearing them, and the prodigious incrcaso 
of demand for stockings enabled all the knitters to 
gain a livelihoo<i by spifuiing the materials that 
wore to be woven into stockings. 




That was a resource in former times, but house- 
hold spinning is scarcely ever seen since Ark- 
wright's invention of spinning jennies. Where 
are the spinners now to find employment ? The 
improvements in machinery drive these poor work- 
men from one expedient to another, till I fear at 
last every resource will be exhausted. 

MRS. B. 

No ; that cannot be the case. Where there is 
capital the poor will always find employment. In 
countries possessed of great wealth we see prodi- 
gious works undertaken. Roads cut through hills, 
canals uniting distant rivers, magnificent bridges, 
splendid edifices, and a variety of other enterprises 
which give work to thousands, independently of the 
usual employment of capital in agriculture, manu- 
factures, and trade. What is the reason of all 
this ? It is in order that the rich may employ their 
capital ; for in a secure and free government no man 
will suffer any part of it to lie idle; the demand for 
labour is therefore proportioned to the extent of 
capital. Industry, we have already observed, knows 
no other limits. The capitalist who employs a 
new machine is no doubt the immediate gainer by 
it; but it is the public who derive from it the 
greatest and most lasting advantage. It is they 
who profit by the diminution of price of the gootk 


ON rAPITAI.. 115 

fabricated by the machine ; and, singidar as it may 
appear, no class of tlie public receives greater bene- 
fit from the introduction of those processes which 
abridge manual labour, than the working classes, 
as it is they who are most interested in the cheap- 
ness of the goods. 


Well, Mrs. B., I must confess myself vanquished, 
and beg pardon of Mr. Watts for having ventured 
to doubt the beneficial effects of his steam-engine ; 
and of Sir Richard Arkwright for having founil 
lault with his spinning jennies. 

MRS. B. 

I will read you a passage in Macpherson's His- 
tory of Commerce which will shew you the degree 
of estimation in which the inventions of Arkwright 
were held by that writer. 

" If Mr. Arkwright made a great fortune, lit- 
" certainly deserved it ; for the advantages he con- 
** ferred upon the nation were infinitely greater 
" than thos.e he acquired for himself; and far more 
*' solid and durable than a hundred conquests. 
" Instead of depriving the working poor of employ- 
" ment by his vast abridgment of labour, that very 
*' abridgment has created a vast tleal of work for 
** more hands than were formerly employed ; and 
" it was computed that in 1785, about '2^ years 
♦' after the invention of his spinning jennies, that 


" half a million of people were employed in the 

" cotton manufiictures of Lancashire, Cheshire, 

" Derby, Nottingham, and Leicester. And it is 

" but justice to the memory of Sir Richard Ark- 

" Wright to say that he was unquestionably one of 

" the greatest friends to the manufacturing and 

" commercial interests of this country, and to the 

" interest of the cotton planters in almost all parts 

" of the world, and that his name ought to be 

" transmitted to future ages, along with those of the 

" most distinguished benefactors of mankind." 


This is indeed a magnificent eulogium of Sir 
Richard Arkwright, but not more so, it appears, 
than he really deserves. 

MRS. B. 

I shall conclude my observations on the benefits 
arising from machinery, by reading to you some 
remarks on the invention of printing, extracted 
from Mr. Say's excellent treatise on Political 

♦* Au moment ou elle fut employee une foule de 
** copistes durent rester inoccu|)e3, car on peut 
** estimer qu'un seul ouvrier imprimeur fait autant 
" de besogne que 200 copistes. II faut done 
" croire que 199 ouvriers sur 200 resterent sans 
« ouvrage. He bien, la facilite de lire les ouvragcs 


" iniprimcs, plus grande que pour Ics ouvrages 
" manuacrits, le bas prix auquel les livres tombe- 
" rent, ['encouragement que cette invention donna 
" aux auteurs pour en composer un bien plus grand 
*' nombre, soit d'instruction, soit d'amusement, 
*' toutes ces causes firent, qu'au bout de tres peu do 
*' temps, il y eut plus d'ouvriers imprimeurs em- 
" ployes, qu'il n'y avoit au|>aravant de copistes. Et 
" si a present on pouvoit calculer exactement non 
" seulement le nombre des ouvriers imprimeurs, 
" mais encore des industrieux que Timprimerie 
" fait travailler, comnie graveurs de poin^ons, 
" fondeurs de caracteres, relieurs, libraires, on 
" trouveroit peut-etre que le nombre des personnes 
" occupees par la fabrication des livres est cent 
" fois j)lus grand que celui qu'elle occupoit avant 
" I'invention de I'imprimerie." 


And the number of readers must have increased 
in a still greater proportion. You msxy recollect 
observing, in our conversation on the division of 
labour, that the invention of printing was a cir- 
cumstance most favourable to the diffuiiion of 

But a considerable increase would not, in the case 
of every commodity produced by raachiftery, be 
required ? 


MUS. B. 

Certainly not. It is not a n£?cessary consequence 
of the invention of nmcliinery, that more hands 
should he required in the manufacture where it is 
applied ; the additional quantity of the commodity 
produced by the same number of hands will in some 
instances be sufficient to supply the increased de- 
mand. But supposing even that no augmentation 
of the commodity should be require<l, and that a 
certain number of hands should be dismissed in con- 
sequence of the abridgment of labour, the capital 
thus economised, by being applied to sonic other 
purpose, is an advantage both to the proprietor and 
the })ublic, and eventually affords employment ibr 
the labourers thrown out of work. 

Thus you see that capital, whether fixed or cir- 
culating, invariably promotes the increase of the 
produce of the country ; we may, therefore, I think, 
define capital to be any accumulated produce which 
tends to facilitate future productions. And the 
capital of a country is composed of the aggregate 
property of all its inhabitants. 











MRS. B. 

1 V our last conversation I think wc came to this 
oncJusion, that capital is almost as beneficial lo 



the poor as to the rich ; for though the property oi 
the one, it is by its nature destined for tlie main- 
tenance of the other. 


It comes to the labourer in the form of wagce, 
but as we mubt allow the capitalist a profit on his 
work, I should like very much to know what pro- 
portion that profit bears to the wages of the la- 

MRS. B. 

It varies extremely, but the wages of the labourer 
can never be permanently less than will afford him 
tlic means of living, othci-wise he could not labour. 


On the other hand, they can never be equal to 
the whole value of the work he produces; for if his 
master made no profit by him he would not employ 

MRS. B. 

Such then arc the two extremes of the wages of 
labour, but tlicy admit of many intermediate degrees 
of variation. If besides furnishing subsistence for 
himself, the wages of the labourer would not enable 
him to maintain a wife and bring up a family, the 
class of labourers would gradually diminish, and the 
scarcity of hands would then raise their wages, 
rt hich would enable them to live with more comfort 



and rear a family; but as the capitalist wHl always 
keep wages as low as he can, the labourer and his 
taniily can bcldom command more than the neces- 
saries of hfe. 


Hy the necessaries of life do you mean such 
things only as are indispensably necessary tor its 
support ? 

MRS. B. 

N\) ; I mean such foini, clothing, and general 
accommodation as the climate and custom of the 
country have rendered essentia) to the preservation 
of the life, health, and decent appearance of the 
lowest classes of the people. Fuel, for instance^ 
and warm clothing are necessary articles in this 
country; but they are not so in Africa. Civilisa- 
tion and the progress of wealth and manufactures 
have greatly extended the scale of necessaries ; tlie 
use of linen is now considered as necessary by ail 
classes of people, and shoes and stockings in Eng- 
land, at least, almost equally so. Houses with 
glazed windows and a chimney arc become neces- 
-?rics; for if our poor were deprivctl of such ac- 
iimodation it would very materially increase 
iiiillty amongst them. In Ireland the peasantry 
Miig up their children in a mud-cabin, the door 
"t \\liich answers also the purposes of window and 




Then would it not be better that the hibouring 
classes here should, like the Irish, accustom them- 
selves to hardships and inconveniencies, rather than 
indulge in a degree of comfortable accommodation, 
the privation of which, in a season of distress, is 
attended with so much misery ? 

MRS. B. 

No ; I would on the contrary wish rather to ex- 
tend than contract the scale of the necessaries of 
life. There is more health, more cleanliness, more 
intellect, and more happiness developed in an 
English cottage than in an Irish cabin. There is 
more strength, vigour, and industry in an English 
peasant, who feeds on meat, bread, and vegetables, 
than in an Irish one, who subsists on potatoes 


No doubt I would wish the lower classes every 
comfort which they can afford, but their wages will 
not always allow them such gratifications. What 
is it that determines the rate of wages ? 

MRS. B. 

It depends upon the proportion which capital 
bears to the labouring part of the population of the 



Oi-, in other woVds, to tlic proportion which sub- 
sistence bears to the number of people to be main- 
tained by it ? 

MRS. B. 

Yes, it is this alone which regulates the rate of 
wages, when they are left to pursue their natural 
course. It is this alone which creates or destroys 
the demand for labour. In ordet* to render it more 
clear to you, let us simplify the question by examin- 
ing it on a small scale — let us suppose, for instance, 
that we have founded a colony in a deport island ; 
tliat the settlers have divided the land amongst them, 
and cultivated it for their own subsistence, and that 
being both jiroprietors and labourers, they reap the 
whole reward of their industry. Thus situated, 
should a ship be wrecked on the coast, and some 
of the crew effect their escape to shore, what would 
ensue ? They would furnish a supply of labourers, 
who would be dependent on the original settlers 
for maintenance anil employment. 


Ikit if those settlers have not raisetl a greater 
<]uantity of subsistence than is necessary for their 
own use, how can they maintain the new comers? 
Without capital, you know, ihcy cannot employ 

o 2 


You are perfectly right. But it is probable that 
the most industrious of them will liavc raised some- 
what more subsistence than is absolutely necessary 
for their own consumption. They will possess some 
little stock in reserve, which will enable them to 
maintain and employ at least a few of the ship- 
wrecked crew. Yet as these poor destitute men will 
all be anxious to share in this little surplus, each 
will offer his labour in exchange for the smallest 
pittance that will support life. Thus the capital of 
the island being inadequate to the maintenance of 
its [)opulation, the competition amongst the la- 
bourers to get employment will render wages ex- 
tremely low, and the capitalist will derive a high 
profit from the industry of his labourers. A small 
capital, therefore, creates but a small demand for 


By demand for labour do you mean the demand 
of the poor for work, or of the capitalist for work- 
men ? 

MRS. B. 

Certainly the latter. The demand for labour 
means the demand for labourers, by those who have 
the means of paying them for their work, whether 
it be in the form of wages, maintenance, or any 
other kind of remuneration. 

But what will happen in our colony, when the 

ON WAr.Eii AND I'orri.ATION. 125 

labourers shall have richly repaid their employers 
h\ the fruits of their industry ^ 


By raising a more |)lenliful harvest they would 
of course have a more plentiful subsistenee. 

MRS. B. 

The iiarvest, you must observe, belongs, not to 
the men wlio produced it, but to their masters ; 
how, therefore, docs it follow of course that the la- 
bourers obtain a larger share of it ? 


I suppose that their masters having more capital, 
are willing to bestow a larger proportion of it on 
their labourers. 

MRS. B. 

I believe that the capitalist will always make as 
high a profit as he can upon the work of hi? laboin*- 
crs; and that when his capital increases, he will 
choose rather to increase the number of his workmen 
than the rate of their wages. But the power of 
employing more labourers increases the demand 
for labour; and this, as I shall explain to you, 
eventually raises the wages or reward of labour. 

The cajiital of the settlers will probably be so 
much augmented by the industry ot the labourers, 
that there will no longer be any difficidty in main- 

i2('> ON wa<;ks and roruLAT/oN- 

taining the new comers. Tlic possessors ol tins 
increased capital will be eager to procure the 
services of the labourers ; one perhaps to build a 
hut, another to fence a field, a third to construct 
a boat, and so on. For the surplus, unless em- 
ployed, will yield no prolit; tlie competition thcie- 
fore will no longer be amongst the labourers to 
obtain work, but amongst the masters to obtain 
%vorkmen; and this will necessarily raise the price 
of wages, and consequently diminish the profits of 
the capitalist. 


Oh, that is very clear. If John offers a man a 
shilling a day to work at his liouse, and Thomas 
gives eighteen-pence to those who will build his 
boat, while James pays two shillings for fencing his 
field; wages must rise to two shillings a day : for if 
John and Thomas did not give as much as James, 
the latter would monopolise all the labourers. 

iMKS. B. 

You sec therefore that it is the additional capital 
produced by the labour of these men, which by in- 
creasing the demand for labour raises their wages. 
'Huis whenever capital for the maintenance of la- 
bourers abounds, the capitalist must content him- 
self with smaller profits, and allow his workmen o 
nvjre liberal remuneration. 



Oil, that is charming! that is exactly what I 
^ ^ish. But, Mrs. B., if, during tlie second year, our 
colonists employ their labourers in building houses 
and fencing fields, instead of cultivating them, sub- 
sistence will again fall short, and the labourers will 
be reduced to their former necessitous condition ; 
unless having once experienced such distress, they 
guard against it in future. 

MRS. B. 

rhat docs not depend on the choice of the la- 
bourers who must do the work they arc hired to 
jxjrform, of whatever nature it may be. 13ut their 
employers will be careful to provide for their main- 
tenance, for they know that those who should 
neglect to make such a provision for their future 
services would be deprive<l of them. They cannot 
work without subsistence, nor will they work with- 
out an ample subsistence whilst any of the colonv 
luxs it to offer them. If John therefore does not 
raiiie so great a harvest as James, he will not be able, 
ijje following year, to employ so many workmen. 
Each landed proprietor therefore will take care to 
direct the labour of his workmen towards raising 
the requisite subsistence, bel'ore he employs tliem 
in any other description of labour: it is for this 
ibsistence that there will be the greatest demand, 
ajid it is demand which icgulates supply. 
(. A 


Now let us suppose that the .-.hipwreckctl crew 
had brought wives with them, ami reared families : 
would that havf aflf-rtpil thi laii' nl" waives? 


liieir wages would remain tlie bumc ; but as 
they would have to maintain their wives and 
children as well as themselves, they would not 
fare so well. 

MRS. B. 

And it there was not food enough for them all, 
the most weakly of the children woukl die, not 
precisely of hunger, but of some of those diseases 
which want of sufficient and proper food engen- 
ders. It is evident, therefore, that a iabourer 
ought not to marry unless his wages are ade(|uatc 
to the maintenance of a family ; or unless he has, 
like your gardener, some little provision in store to 
make up the deficiency. 

Suppose now after several years of prosperity, 
tliat a hurricane makes such devastation amongst 
the crops of our colonists as to reduce the harvest 
to one half what it was the preceding year. What 
(ffid would this have on the wages of labour ? 


It would unquestionably reduce tliem, for th(; 
stock of subsistence wotild be diminished. But 


111 xs}t:ii manner the rediiotion would takf» pflfect 
I (In nnl clearly sec. 

MRS. B. 

In order to trace its consequences step by step, 
Hf may suppose that John, finding his capital will 
not maintain more than one half of the number ol 
labourers he before employed, reluctantly discharges 
the other half. These poor men wander about the. 
colony seeking for work, but instead of finding any, 
they meet only witli companions in distress who 
have lost tlieir employment for similar reasons; 
ihu-. without resource they return to their masters, 
and intreat to be employed on lower terms. John, 
wlio had discharged these men, not for want of 
^M»rk to give them, but for want of funds to pay 
them, i:» happy in his rciluced circumstances to 
employ labourers at lower vvagi'>. I le therefore 
makes a new agreement with them, and determines 
to di^charge those wliom ho had originally retained 
in hii» service unless they will convent to work for 
him on the same terms. 'I'hesc men, aware of the 
ciifTiculty of finding employment elsewhere, are 
compelled by necessity to accept the condition-, 
and thus wage* arc reduced to one hidf their former 

le throughout the colony. 


li appears as evident as possible. I have only 
(i 5 


one objection to make, which is, that though this 
jnay be the case in our colony, it certainly is not so 
in other places. Wages, so far from being re- 
duced, are, I believe, frequently raised during a 
scarcity : at least there are great complaints amongst 
the poor if that is not done. 

MRS. B. 

In countries where money is used, it is unneces- 
saiy to make any change in the rate of wages during 
a scarcity, because the high price of provisions 
produces a similar effect. If you continue to pay 
your labourer the same wages when the articles of 
provision on which he subsists have doubled in 
price, his wages are less efficient by one half, be- 
cause he can procure with them only one half of 
what he did before the scarcity. 


But this is a kind of imposition upon the poor 
labourers, who, I suppose, are at least as ignorant 
as I am of political economy, and arc not aware 
that a shilling can purchase more at one time than 
it can at another, and therefore during a scarcity 
continue to work at the usual rate of wages for 
want of knowing better. 

MRS. B. T 

Knowledge in this instance would only teach 


iheni that tlicy must bear with patience an un- 
avoidable evil. The alternative, for capitalists 
when capital is diminished, is to reduce, either 
the number of their labourers, or the rate of their 
wages — or rather, I should say, the remuneration 
of their labour ; for the money-wages remain the 
same. Now is it not more equitable to divide 
the maintenance amongst the whole of the lubour- 
ig class, than to feed some of them amply, whilst 
ilic remainder starve? 


\o doubt it is; but would it not, in this instance, 
he allowable for the legislature to interfere, and 
blige the capitalist to raise the rate of wages in 
proportion to the rise of price of provisions, so as 
to afford the labourers their usual (juantity of 
subsistence? I think the rate of wages ought to 
bo regulated by the price of bread, as that is the 
principal subsistence of the poor ; so as to enable 
thcnj to purchase the same quantity of bread what- 
ever its price may be. 

MRS. B. 

Or, in other words, that every man may eat his 
usual quantity of bread, however deficient the har- 
vest is in its produce; for unless you could find 
means to increase the quantity of subsistence, it will 
avail nothing to raise the rate of wjigcs. 



Very true; yet two shillings will purchase twice 
the quantity of bread that one will : is not that 
true also Mrs. B. ? and yet these truths appear in- 

nms. B. 
One of them must therefore be an error ; two 
Uiillings would not purchase twice the quantity of 
bread that one did if wages were doubled, because 
provisions would continue to rise in price in pro- 
portion to the advance on wages. 


But I would prohibit the farmer from raising the 
price of his corn and his cattle, and then there 
wcnild bo no necessity for the butcher and the 
baiicr raising the price of meat and bread. It is 
not just that the farmer, when he has a bad crop, 
should throw his misibrtunc on the public, antl \n- 
the only person who doch notsufler from it; which 
is the case if he raises the price of his produce in 
proportion to its scarcity. 


The farmer consumes as well as j)roduccs pro- 
tisionsv and as a consumer he partakes of the evil 
of the advance of price. If he sell his corn for twice 
tlic u>ual price, what he consumes at home stand- 

ON H'A(.rs AM) FOPll.ATION. I.S.j 

him in the samevahic, for sucli is the jitit c ii would 
t'rtch at market. 

But supposing it possible to prevent the rise in 
price (luring a scarcity, what consccjiiences wdhIcI 
irisue !'' Keep in mind the important point, that tiie 
harvest has yielded but half its usual product; that 
vvhiUt the wa^es of labour and the price of pro- 
visions undergo no alteration, the labourers pur- 
i hasc and consume the usual quantity of food, and 
it the end of six months .... 


^'^JU need not finish the sentence, Mrs. B. ; at 
ihc end of six months the whoie stock of provisions 
would be consumed, and the people who excitod 
mv commiseration would be starved. 

MRS. n. 
'I'his would infullibK be the case, were such ,i 
measure perscvercil in ; but though it has often 
been attempted by sovertigns more benevolent 
than wise, to set limits to the price of jirovisions, 
I he consequences voon became so formidable as to 
compel the legislature to put a stop to a remedy 
which was as ineffectual as it was pernicu)us. 
• " In the year \Mr> England was afllictiHl by a 
" famine, grievous bcyt)nil all that ever were known 
" before, which raised the price of provisions far 

Mncphcrsoirs Annali of Commerce^ 


" above the reach of the people of miildliii^ classes. 
'* The parliament, in compassion to the general 
*' distress, ordered that all articles ol" food should 
" be sold at moderate prices, which they took 
*' upon themselves to prescribe. The consccjuence 
" was that all things, instead of being sold at or 
" undir the maximum price fixed by them, be- 
" came dearer than before or were entirely with- 
" held from the market. Poultry were rarely to 
'' be seen. Butchers' meat was not to be found at 
»' all. The sheep were dying of a pestilence, and 
»' all kinds of grain were selling at most enormous 
" prices. Early the next year the parliament, 
" finding their mistake, left provisionts to find their 
" own price." 

Thus you see that the rise in the price of pro- 
visions is the natural rcmetly to the evil of scarcity. 
It is the means of husbanding the short stock of 
food, and making it last out to the ensuing harvest. 
Government should never interfere, either with 
the price of provisions or the rate of wages ; they 
will each find their respective level if left uncon- 

But to return to our colony. What effect would 
it [Produce on wages, were some contagious maladv 
to carry off one half of the labourers ? 


It would increase the demand for the labour of 




iliobc Mhicli remained, and consequently raise their 

MRS. B. 

We may generally state, therefore, that when the 
number of labourers remains the same, the rate of 
wages will increase with the increase of capital, and 
lower with the diminution of it; and that if the 
amount of capital remain the same, the rate of 
wages will fall as the number of labours increase, 
and rise as the number of labourers diminish; or, 
as mathematicians would express it, the rate of 
wages varies directly as the quantity of capital, and 
inversely as the number of labourers. 

Macpherson mentions that " a dreadful pesti- 
lence, which originated in the eastern regions, 
began its ravages in England in the year l.S-18, 
and is said to have carried o(T the greater part 
of the people, especially in the lower ranks of 
litV'. The surviving labourers took advantage of 
the demand for labour and the scarcity of hands 
to raise their prices. Tlie king, Edward I., 
I «* thereupon enacted the statute of labourers, which 

• ordainetl that all men and women under <'.() year^ 

• of age, whcilurof free or -ervile condition, hav- 
'• ing no occupation or property, should serve any 
'• person of whom they s-hould be required, and 

• should receive only the wages which were usual 
•' before the year 1316, or in the five or six j>re- 
•' ceding years, on pain of imprisonment, the cm- 


" ployers being also punishable for giving greater 
" wages. Artificers wore also proliibited from de- 
" manding more than the old wages ; and butchers, 
" bakers, brewers, &c. were ordered to sell their 
" provisions at reasonable prices. The ' ser- 
" vants having no regard to the said ordinance, 
" but to their ease and singular covetise,' refused 
" to serve unless for hi"her waijes than the law 
" allowed them. Therefore the parliament, by 
" another statute, fixed the yearly and daily wages 
" of agiicultural servants, artificers, and labourers, 
" the payment of threshing corn by the quarter, 
" and even tli'j price of shoes. They also forbad 
" any person to leave the town in summer wherein 
" he had dwelt in the winter, or to remove from 
" one shire to another. 

" Thus were the lower classes debarred by laws, 
*' which in their own nature must be inefficient, 
*' from making any effort to improve their situation 
« in life." 


I had always imagined that a great demand for 
labour was occasioned by some great work that was 
to be executed, such as digging a canal, making 
new roads, cutting through hills, &c. ; but it seems 
that the demand for labour (Upends, not so much 
on the quantity of work to be done as on the quan- 
tity of subsistence provided for the workmen. 

ON ua(;es wr) poi'i'i.aiion. I.ij" 

.MRS. H. 

W Drk U) Ik,* pcrlbrmcd is ilie imnuiluite cause 
il the deniuiul for labour; but however great or 
important is the work which a man may wis!) to 
undertake, the execution of it must always be li- 
mited by the extent of his capital ; that is to say, 
by the funds he possesses for the maintenance or- 
payment of his labourers. The same observation 
applies to the ca})ital of a country, which is only an 
agf^rcgate of the capital of individuals ; it cannot 
employ more people than it has the means of main- 
taining. All the waste land capable of cultivation 
in the country might l>e called work to be done, 
but one must have, not only labourers to do that 
work, but a suHicient quantity of subsistence to 
support them. In our conversation on capital we 
observed, that in countries of large capital great 
works were undertaken, such as public buililings, 
bridges, iron rail- ways, canals, &c. All these 
things are u sif^n of redundance of wcaltii. 


In Ireland 1 understand that the wages of coni- 
Ynou labourers are much lower than in Enghuul : 
i» it on account of the capital ot that country In-ing 
less adequate to the maintenance of its population ? 

MRS. B. 

'J'hal is, no doubt, om' of the piliicipal causes 


of the low price of labour in that country ; but 
there are many other causes which affect the price 
of labour, arising from the imperfection of its go- 
vernment. The Irish are far less industrious than 
the English. Arthur Young, in his travels through 
Ireland, observes, that '* husbandry-labour is 
*' very low priced, but not cheap. Two shillings 
" a-day in Suffolk is cheaper than sixpence a-day 
" in Cork. If a Huron would dig for two-pence 
" a-day, I have little doubt but that it might be 
" dearer than the Irishman's sixpence." 


But, Mrs. B., the price of labour does not only 
vary in different countries, but very considerably 
in different parts of the same country. In pur- 
chasing some cutlery a few days ago, I was shown 
country and town made knives and forks, appa- 
rently the same, yet the difference in price was 
considerable. Upon enquiring the cause, I was^ 
informed that it was owing to wages being so mucli 
higher in London than in the country. 


And if you had enquired the cause of the high 
rate of wages of London workmen, you would have 
heard that it was on account of their being better 
workmen; the ablest artificers' generally resort to 
London, as the place where their skill will be most 


duly appreciated, and where their employers can 
best afford to reward it. 

It is but just to remunerate labourers according 
to their ability. Your liead gardener does less 
work than any of the men under him ; yet he has 
the highest wages, on account of the skill and ex- 
perience he has acquired. A working silversmith 
has on this account higher wages than a taylor or 
a carpenter. 

But where skill is not requisite, the hardest and 
most disagreeable kinds of labour are best paid : this 
is the case with blacksmiths, iron-founders, coal- 
heavers, &c. 

A consideration is also had for arts of an un- 
wholesome, unpleasant, or dangerous nature, such 
as painters, miners, gunpowder makers, and a 
variety of other analogous employments. 

















I HAVE been reflectin<( a great deal on our last 
conversation, Mr:-. B., and the conclusions I liavc 
drawn from it arc, that the greater the capital a 
countrA' possesses, the greater number of people it 
can maintain, and the higher the wages ol' lal)onr 
will be. 

<iN *\ MJl.<> AM» J'KI-L 1 A 1 ION. Ill 

MRS. U. 

Mic greater the stock oi" subsistence-, tlie inorc 
jM.<»j)lc may be nuiintaiiied by it, no doubt; but 
your second iurerence is not at all a necessary con- 
clusion. China is a very rich country, and yet 
wages arc I believe no where so low. The accounts 
which travellers give of the miserable state of the 
inferior classes are painful to hear; and their poverty 
i«> not the result of, for they run about the 
streets with tools in their hands, Ingging for woik. 


That is owing to the immense population of 
China; so that, though the capital t>f the country 
may be very considerable, still it is insufticicnt for 
the maintenance of ail its inhabitants. 

MRS. B. 

You should therefore always remember that the 

rate of wages dtK-s not depend upon the absolute 

r|uaniity of capital, but upon its (juantity relative to 

the number of people to be maintained by it. This 

i.s a truth which, however simple, is continually 

U»>1 sight of, and hence arise errors without nuin- 

r in political economy. If China had ten times 

• wcallh it actually pos>ek8e>, and its |)opulatio(i 

^ I re at the same time tenfold as numerous, the- 

people would not be better fetl. 

America, on the other hand, is a coimtrv of vcrr 

1 !_' ON W.vr.ES AM) POl'l I.ATIOK. 

small capital, ami yet wages arc remarkably lii^li 


How do you account for that ? for the demaiul 
for labour, you know, can be only in proportion 
to the extent olcajiital. 

MRS. B. 
The capital of America, though small when com- 
pared with those of the countries of Europe, is very 
considerable in proportion to the number of people 
to be maintained by it. In America, and in all 
newly-settled countries as yet thinly inhabited, the 
wages of labour are high, because capital increases 
with prodigious rapidity. WTiere land is plentiful 
and productive, antl the labourers to cultivate it 
scarce, the competition amongst the landholders to 
obtain labourers is so great as to enable this class to 
raise their deniaiuls, anil the higher the wages the \\ 
labourer receives, the sooner he has it in his power 
to purcliase a piece of" land and become landholder 
himself Thus the class of labourers is continually 
passing into the class of proprietors, and making 
room for a fresh influx of labourers, both from the 
rising generation and from emigrations from foreign 

CAROr.IN'L. 31 

America has then the double advantage, of high 
wages and low price of land ; no wonder that it is 
so thriviiifj a country 


MRS. It. 

The progress of wealth and impruviiiiLiiL i^ no 
*hcrc so rapid as in the settlement of a civilised 
people in a new country ; provided they establish 
laws for the security of their property, they require 
no other incitement to industry. In the new set- 
tlements of America, where the experienced farmer 
with his European implements of husbandry is con- 
tinually encroaching on the barren wilderness, want 
IS almost unknown, and a state of universal pros- 
perity prevails. We may form some judgment of 
the rapiil increase of their capital by that of their 
population. The facility with which the Ameri- 
cans accjuire a maintenance suflicient to bring up a 
family cncournges early marriages, and gives rise 
to nunjorous families ; the children arc well fed, 
thriving, and healthy; you may imagine how small 
arc the proportion that die in comparison to the 
number born, when I inform you that their popu- 
lation doubles itself in about 2a years ! 


But docs not such an immense increase of popu- 
lation reduce the rate of wages? 

MRS. It. 

Ko, beiause their capital increases in a still 
greater proportion; and a*, long as that i»; the case, 
wages, you know, will rise rather than fall. But 



what I have said relative to America refers only to 
the United States of* that country; which have the 
advantage of a tree government protecting the pro- 
perty of all classes of men. In the Spanish settle- 
ments, where the government is of a very different 
description, the condition of the people is far less 
flourishing. The population of Mexico, one of 
the finest provinces of Spanish America, docs not 
double itself in less than 48 years. 


Yet I do not well understand why the poor 
should be worse oft" in England where there is a 
large capital, than in America where there is a 
small one. 

MRS. B. 

Because you are again forgetting the fundamental 
rule which I have laid down fbr you, that capital must 
always be considered with reference to the nunibcr 
of people to be employed and maintained by it. 

In England, and all the old-established countries 
of Europe, the population has gradually increased 
till it has equalled the means of subsistence ; and 
as Europe no longer aflbrds the same facility fbr 
the growth of capital as a newly-settled country, 
if the population goes on augmenting, it may exceed 
the means of subsistence, and in that case the wages 
of labour will fall instead of rising, and the con- 
.<lition of the poor become very miserable. 




But how is it possible for population to increase 
beyond the means of subsistence ? Men cannot live 
without eating. 

MRS. B. 

No; but they may live upon a smaller portion of 
food than is necessary to maintain them in health 
and vigour; children maybe born without their 
parents having the means of providing for them. 
Increase of population therefore, under such cir- 
cumstances, cannot be permanent ; its progress will 
be checked by distress and disease, and this I ap- 
prehend to be one of the causes of the reduced 
"*tate of the poor in this country. 


I declare I always thought that it was very de- 
«irable to have a great population. All rich thriving 
countries are populous ; great cities are populous ; 
wealth, which you esteem so advantageous to a 
country, encourages population ; and population in 
its turn promotes wealth, for labourers produce 
more than they consume. You recollect how rich 
our colony became by the acquisition of the labour 
of the ship-wrecked crew; their first arrival was 
ittended with some inconvenience, it is true ; but I 
should say as you do with respect to machinery, 
the inconvenience is small and temporary, the ad- 
vantage both durable and extensive. 



MRS. B. 

A great population is liiglily advantageous to a 
country, where there is a capital which will afford 
wages sufticicnt tor a labourer to bring up his chil- 
dren ; for population is not usually increased by 
the acquisition of a number of able labourers, (as 
was the case in our colony,) but by the birth of 
helpless infants, who depend entirely upon their 
parents for subsistence. If this subsistence is not 
provided, the children are born merely to languish 
a few years in poverty, and to fall early victims to 
disease, brought on by want and wretchedness. 
Under such circumstances, they can increase neither 
the strength, the wealth, nor the happiness of the 
country. On the contrary, they weaken, impo- 
verish, and render it more miserable. They con- 
sume without reproducing, they suffer without 
enjoying, and they give pain and sorrow to their 
parents, without ever reaching that age when they 
might reward their paternal cares. Yet such is the 
lot of many poor children, wherever population 
exceeds the means of subsistence. 


What a dreadful reflection this is ! But you do 
not suppose that there arc any children actually 
starved to death ? 

MRS. B. 

I hope not ; but the fate of those unfortunate 



iiirantsj is scarcely less deplorable who perish by 
slow degrees for want of proper care and a suffi- 
ciency of wholesome food. A large family of 
young cliildren would require the whole of a mo- 
ther's care and attention ; but that mother is fre- 
quently obliged to leave them to obtain by hard 
labour their scanty meal. Want of good nursing, 
of cleanliness, of fresh air, and of wholesome nou- 
rishment, engenders a great variety of diseases, 
which cither carry them off, or leave them in such 
a state of weakness that they fall a sacrifice to the 
first contagious malady which attacks them. It is 
to this state of debility, as well as to the want of 
medical advice and judicious treatment, that must 
be attributed the mortality occasioned by the small- 
pox and measles amongst the lower classes of chil- 
dren, so much greater than in those of the upper 
ranks of society. 

Nor are the fatal effects of an excess of popula- 
tion confined to children. A sick man, who mijrht 
be restored to health by medical assistance and a 
proper diet, perishes, because he can afford to ob- 
tain neither. A delicate or an infirm woman re- 
quires repose and indulgence which she cannot 
command. The necessaries of life vary not only 
with the climate and customs of a country, but witli 
the age, sex, and infirmities of the individuals who 
inliabit it : and wherever these necessaries are de- 
ficient, mort;ility prevails. 
H 2 


Do you understand now, why the rate of wages 
and the condition of the poor is better in countries 
which, like America, arc growing rich ; than in 
those which, like England, have long accumulated 
large capitals, but whose wealth is cither stationary 
or making but slower progress ? 


Yes; it is because when capital augments very 
rapidly, labour is in great demand and well re- 
warded. But when wealth, however great, has 
long been stationary, population has risen up to the 
means of subsistence, or perhaps gone beyond it, 
so that wages fall, and distress comes on. 

MRS. B. 

This is what I formerly alluded to, when I told 
you that you would find that the accession of 
wealth was more advantageous to a country, as 
well as to an individual, than the possession of any 
capital which did not increase. 

I must read you a passage of Paley on this sub- 
ject, in which he expresses himself with remarkable 

" The case of subsistence and the encourage- 
" ment of industry depend neither upon the price 
" of labour, nor upon the price of provisions; but 
" upon the proportion which the one bears to the 


** Other. Now the influx ot wealth into a country 
" naturally tends to advance this proportion ; that 
" is, every fresh accession oi" wealth raises the 
" price of labour, before it raises the price of 
" provisions. 

" It is not therefore the quantity of wealth ool- 
" lectcd into a country, but the continual increase 
" of that quantity, from which the advantage arises 
" to employment and population. It is only the 
" accession of wealth which produces the effect; 
" and it is only by wealth constantly flowing into, 
" or springing up in a country, that the effect can 
" be constant." 

You must not, however, iniagme that the capital 
of this country reniaiufi stationary ; on the con- 
trary, we arc making rapid advances in wealth, 
though we cannot pretend to equal the progress of 
a newly settled country. The only apprehension 
is, that population may have been increasing in 
a still greater ratio than capital. The severe 
checks which industry has received during these 
last thirty years, throughout the greater part of 
Europe, from a constant state of the most ex- 
pensive warfare, has, 1 fear, greatly retarded the 
progress of capital, without equally affecting that 
of population ; but if the increase of the latter 
lias occasionally outstripped the means of sub- 
♦iistence, it is no less owing to the ill-jutlged eon- 
it 3 


duct of the wppcv clastJLs than to the in)pru- 
dence of the lower orders of people. 


You allude, I suppose, to the encouragement of 
early marriages amongst the poor ? 

MRS. B. 

Yes ; we observed that when a great population 
springs from ample means of subsistence, it is 
the highest blessing a country can enjoy ; the chil- 
dren brought up in plenty, attain a healthy and 
vigorous manhood, with strength to defend, and 
industry to enrich their country. Those who have 
not reflected on the subject, have frequently con- 
founded cause and effect, and have, with you, con- 
sidered a great population under all circumsta»ccs 
as the cause of prosperity. Hence the most stre- 
nuous efforts have been made, not only by indivi- 
duals, but even by the legislature, to encourage 
early marriages and iarge families, conceiving that 
by so doing they were promoting the happiness and 
prosperity of their country. 


This is a most unfortunate error. But when 
population is again reduced, the evil corrects it^ 
sejf ; for capital being thus rendered more adequ^att. 


to the muiiitenance of this diminished population, 
tiie wages of" labour will again rise. 

MRS. B. 

Certainly. But it often happens that as soon as 
the labouring classes find their condition improved, 
whether by a diminution of numbers, or an aug- 
mentation of capital, which may spring up from 
some new source of industry, marriages again in- 
crease, a greater number of children are reared, 
and population once more outstrips the means of 
subsistence; so that the condition of the poor, 
after a tcmpoi'ary improvement, is again reduced 
to its former wretchedness. 


That is precisely what has occurred in the village 
near which we live. It was formerly, I have heard, 
but a small hamlet, the inhabitants of which gained 
a livelihood as farmers' labourers. Many years 
ago a cotton-manufacture was set up in the neigh- 
bourhood, which afforded ample employment for 
the poor; and even the children, who were before 
idle, could now earn something towards their 
maintenance. This, during some years, had an 
admirable effect in raising: the condition of the 
labouring classes. I have heard my grandfather 
say that it was wonderful to see how rapidly the 
village improved, how many new cottages were 
H 1 


built, and what numerous families they contained. 
But this prosperous state was not of long duration : 
in the course of time the village became over- 
stocked with labourers, and it is now sunk into a 
state of poverty and distress worse than that from 
which it had so recently emerged. 

MRS. B. 

You see, therefore, that this manufacture, whicli 
at first proved a blessing to the village, and might 
always have continued such, was, by the improvi- 
dence of the labourers, converted into an evil. If 
the population had not increased beyond the de- 
mand for labour, the manufacture might still have 
afforded them the advantages it at first produced. 


This, then, must be the cause of the misery which 
generally prevails amongst the poor in manufac- 
turing towns, where it would be so natural to 
expect that the facility of finding work would pro- 
duce comfort and plenty. 

MRS. B. 

And it proves that no amelioration of the con- 
dition of the poor can be permanent, unless to in- 
dustry they add prudence and foresight. Were 
all men as considerate as your gardener, Thomas, 
and did they not marry till they had secured a pro- 


vision for a family, or could cam a sufficiency to 
maintain it; in short, were children not brought 
into the world until there was bread to feed them, 
the distress which you have just been describing 
would be unknown, excepting in cases of unfore- 
seen misfortunes, or unless produced by idleness 
or vice. 


And is it not to these latter causes that a great 
part of the misery in manufacturing towns should 
be ascribed ? J have heard it observed that skilful 
workmen, who could earn a livelihood by three or 
four days' labour in the week, would frequently 
spend the remainder of it in idleness and profli- 

Mils. B. 
I believe that it is much more common for great 
gains to act as a stimulus to industry. Like every 
other human quality, industry improves in propor- 
tion to the encouragement it receives, and it can 
have no greater encouragement and reward than 
high wages. It sometimes happens, it is true, that 
workmen act in the way you mention, but such 
conduct is fas from being common; the greater 
part, when their wages are liberal, keep steadily to 
their work, and if they are paid by the piece, arc 
even apt to overwork themselves, 
n 5 



That I have observed. My father lately agreed 
to pay a certain sum for digging a sank fence 
in our pleasure-grounds ; and two of the under- 
gardeneri? engaged to do it after the day's work 
was over. I thought they would repent of their 
undertaking, when they came to sucli hard labour, 
after having performed their usual task; but I 
was astonished at their alacrity and perseverance : 
in the course of a week they completed the job, 
and received the price in addition to their usual 
wages. 1 wonder that work is not always paitl 
by the piece, it is such an encouragement to 

MRS. B. 

All kinds of work do not admit of being so paid ; 
for instance, the care of a garden could not be 
di\'idcd into jobs, and the gardener be paid so much 
for planting trees, so much for cleaning borders, so 
much for mowing grass, &c. Besides I doubt 
whether it would be desirable that this mode of 
payment should be generally adopted, on account 
of the temptation it affords to labourers to over- 
work themselves ; for notwithstanding all the ad- 
vantages of industry, one would never wish it to be 
pushed to that extreme which would exhaust the 
strength of the labouring Classes, and bring on 
disease and infirmity. The benefits resulting from 
industry arc an increase of the comforts and con- 


vcnicnces of life ; but it would be paying too dear 
for these to purchase them by a sickly and prema- 
ture old age. 

Ill order to be of permanent service to the la- 
bourin<( classes, we must not rest satisfied with en- 
couraging industry; but we should endeavour by 
instruction to awaken their minds to a sense of re- 
mote consequences, as well as of immediate good, 
so that when they have succeeded in rendering their 
condition more comfortable, they may not rashtj' 
and inconsiderately increase their numbers beyond 
the mf\uis of subsistence. 


But if population be constantly kept within the 
limits of subsistence, would it not always remain 
stationary ? 

MRS. B. 

Certainly not; if the people are industrious, 
capital will increase ; and the increase of popu- 
lation will follow of course, and with ndvantaffe. 


I now sec evidently, that population should never 
be encouraged, but where there is great jilenty of 

subsistence and employment. 


MRS. B. 

And then it requires no encouragement. If 
H 6 


men so often marry without having made any pro' 
vision for a family, there is no danger of their not 
marrying when a subsistence is easily obtained; 
and their children will be healthy and long-lived 
in proportion as they are well fed, clothed, and 
taken care of. 


I feel considerable satisfaction in having acquircnl 
correct ideas on this subject ; but the know ledge I 
have gained is not without alloy. The miseries 
arising from an excess of population have left a 
very melancholy impression on my mind. 

MRS. B. 

That population should tend to press upon the 
means of subsistence, and render exertion necessary 
to obtain food, appears to be u law of nature wisely 
calculated lo call into activity the various powers of 
man. It is to this pressure that we owe the appro- 
priation of land, and the consequent diversity of 
ranks and conditions which we have observed to be 
so essential to the progressive improvement of 
societv. It is the foundation-stone of the '^reat 
structure of civilisation, and the means by which 
scanty tribes of wandering savages have been trans- 
formetl into populous natrtins of civilised beings. 
If then it jiroduccs want and wretchedness to some 
part of the community, it feeds millioiis of \Ki~ 


dustrious happy beings, and in a well constituted 
society, the evil will always tend to diniinisli, and 
the good to increase. 


Yet as the world becomes more populous, the 
difficulty of procuring subsistence must surely in- 
crease ? 

MRS. B. 

A period may, it is true, one day arrive when 
the world will be so perfectly cultivated, and so 
fully peopled, that no further augiiientation cither 
of population or of subsistence can take place. 
How many generations will pass awny before that 
epoch, it is impossible to surmise; but let us hojK' 
that before that period arrives, the human character 
will be so far improved in virtue and knowledge, 
that population will no longer trespass upon the 
bounds of subsistence. 

In the present state of the world, the incon- 
venience arising from this pressure on subsistence, 
is so far from being confined to great nations and 
populous districts, that it is nowhere so severely 
tilt as among the savage tribes, who are without 
resource when the supply of food afforded them by 
the chase, by fishing, or the spontaneous protlucc 
of the earth, proves deficient. In India, where the 
Hindoos subsist on rice alone, famines have re- 
peatedly swept away thousand*. I'he more iin- 


proved tlie state of society, the less dreadful are 
these effects; but it is in newly settled countries 
alone, and under free governments, such as the 
United States of America, that we can look for 
complete exemption from this evil. 








I HAVE been reflecting ever since our last inter- 
view, Mrs. B., whether there were no means of 
averting or at least alleviating the misery resulting 
from an excess of population, and it appears to mc 
that though we have not the same resource in land 
as America; yet we have large tracts of waste 
land, which, by being brought into cultivation, 
would produce an additional stock of subsistence. 


MRS. B. 

You forget that industry is limited by the extent 
of capital, and that no more labourers can be em- 
ployed than we have the means of maintaining; 
they work for their daily bread, and without ob- 
taining it, they neither could nor would work. Ail 
the labourers which the capital of the country can 
maintain being disposed of, the only question is, 
whether it be better to employ them on land al- 
ready in a state of cultivation, or in breaking up 
and bringing into culture new lands; and this point 
may safely be trusted to the decision of the 
landed proprietors, as it is no less their interest 
than that of the labouring classes that the greatest 
possible quantity of produce should be raised. 
To a certain extent it has been found more 
advantageous to lay out capital in improving the 
culture of old land, rather than to employ it in 
bringing new land into tillage; because the soil of 
the waste land is extremely poor and ungrateful, 
and requires a great deal to be laid out on it before 
it brings in a return. But there is often capital 
suflP.cient for both these purposes, and of late years 
we have seen not only prodigious improvements in 
the processes of agriculture throughout the country, 
but a great nun)bcr of commons inclosed and 


J vou will think me inconsistent, but I can 


not help regrcttinj; the inclosuro of commons; 
they are the only resource of the cottagers for the 
maintenance of a few lean cattle. Let me once 
more quote my favourite Goldsmith : 

" Where then, ah where shall poverty reside, 
" To 'scape the pressure of contiguous pride? 
" If to some common's fenceless limits stray'd, 
" He drives his flock to pick the scanty blade, 
" Those fenceless fields the sons of wealth dcritlc, 
" And e'en the bare-worn common is deny'd." 

MRS. B. 

You should recollect that we do not admit poets 
to be very good authority in political economy. If, 
instead of feeding a few lean cattle, a common, by 
being inclosed, will fatten a much greater number 
of fine cattle, you must allow that the quantity of 
subsistence will be increased, and the poor, though 
in a less direct manner, will fare the better for it. 
Labourers are required to mclose and cultivate 
those commons, the neighbouring cottagers are 
employed for that purpose, and this additional 
demand for labour turns to their immediate ad- 
vantage. They not only receive an indemnity for 
their loss of right of common, but they ftnd pur- 
chasers for the cattle they can no longer maintain, 
in the proprietors of the new inclosure*. 

\Vlien Finchley Common was inclosed, it was 


(lividetl amongst the inhabitants of that parish ; 
and the cottagers and Httle shopkeepers sold the 
small slips of land which fell to their share to men 
of greater property, who thus became possessed of 
a sufficient (jiiantity to make it answer to them to 
inclose and cultivate it; and the poorer classes 
were amply remunerated for their loss of common- 
age by the sale of their respective lots. 


But if we have it not in our power to provide 
for a redundant population by the cultivation of 
our waste lands, what objection is there to sending 
those who cannot find employment at home, to 
seek a maintenance in countries where it is more 
easily obtained, where there is a greater demand 
for labour? Or why should they not found new 
colonies in the yet unsettled parts of America? 

MRS. u. 
Emigration is undoubtedly a resource f(^r an 
overstocked population ; but one that is adopted in 
general witii great reluctance by individuals; and is 
commonly discouraged by governments, from a 
mistaken apprehension of its diminishing the 
strength of the country. 


It might be wrong to encourage emigration to n 


Very great extent; 1 meant only to provide abroad 
tor tliose whom we cannot maintain at home. 

MRS. B. 

Under an equitable government there is little 
danger of emigration ever exceeding tiiat point. 
The attachment to our native land is naturally so 
strong, and there are so many ties of kindred and 
association to break through before we can quit it, 
that no slight motive will induce a man to expa- 
triate himself. An author deeply versed in the know- 
ledge of the human mind says, " La seule bonne 
ioi contre les emigrations, est cclle que la nature 
a grave dans nos coeurs." On this subject 1 am 
very willing to quote the Deserted Village : 

" Good iieaven ! what sorrows gloom'tl that parting day 
" That call'd them from their native walks away !" 

Besides, the difficulties with which a colony of 
emigrants have to struggle before they can eflcct a 
settlement; and the hardships they must undergo, 
until they have raised food for their subsistence, are 
so discouraging, that no motive less strong than that 
of necessity is likely to induce them to settle in an 
uncultivated land. 

Some capital, too, is require<l for this as well a«> 
for all undertakings ; the colonists must be provided 
with implements of husbandry and of art ; and sup- 
\i\\n\ with food and clothing until they shall have 


succeeded in producing such necessaries tor tlicni- 

Were emigration therefore encouraged, instead 
of being checked, scarcely any would abandon their 
country but those who could not find a mainte- 
nance in it. But should emigration ever become 
so great as to leave the means of subsistence easy 
and plentiful to those who remain, it would natur- 
ally cease, and the facility of rearing children, and 
maintaining i'amilies, would soon fill the vacancy in 

There are, it is true, some emigrations which 
are extremely detrimental to the wealth and pros- 
perity of a country ; these, however, are not occa- 
sioned by poverty, but result from the severity and 
hardships imposed by arbitrary governments on 
particular classes of men. Want of toleration in 
religion has caused the most considerable and nu- 
merous emigrations of this description. Such was 
that of the Huguenots from France at the x'evoca- 
tion of the edict of Nantz. They were a skilful 
and industrious people, who carried their arts and 
manufactures into Germany, Prussia, Holland, and 
England, and deprived France of some of her most 
valuable subjects. Spain has never recovered the 
blow which her industry received by the expulsion 
of the Moors, under Ferdinand and Isabella; not 
all the wealth of America has repaid her for this 


But to return to the population of England; 
the more we find ourselves unable to provide for 
an overgrown population, the more desirous wc 
should be to avail ourselves of those means which 
tend to prevent the evil ; — such, for instance, as a 
genei'al diffusion of knowledge, which would excite 
greater attention in the lower classes to their future 


Surely you would not teach political economy to 
the labouring classes, Mrs. B. ? 

MRS. B. 

No ; but I would endeavour to give the rising 
generation such an education as would render them 
not only moral and religious, but industrious, fru-« 
gal, and provident. In proportion as the mind is 
informed, we are able to calculate the consefjuences 
of our actions : it is the infant and the savage who 
live only for the present moment; those whom in- 
struction has taught to think, reflect upon the past 
and look forward to the future. Education gives 
rise to prudence, not only by enlarging our under- 
standings, but by softening our feelings, by hu- 
manising the heart, and promoting amiable affec- 
tions. The rude and inconsiderate peasant marries 
without either foreseeing or caring for the miseries 
he may entail on his wife and children ; but he who 
has been taught to value the comforts and decencies 


of life, will not heedlessly involve himself aiul all 
that is dear to him in poverty) mu] its \ong train of 


I am very happy to hear that you think instruc- 
tion may produce this desirable end, since the zeal 
for the education of the poor that has been dis- 
played of late years gives every prospect of success; 
and in a few years more, it may perhaps be impos- 
sible to meet with a child who cannot read and 


The highest advantages, both religious, moral, 
and political, may be expected to result from this 
general ardour for the instruction of the poor. No 
great or decided improvement can be effected in 
the manners of the people but by the education of 
the rising generation. It is difficult, if not impos- 
sible, to change the habits of men whose characters 
arc formed and settled; the prejudices of ignorance 
that have grown up with us, will not yield to new 
impressions ; whilst youth and innocence may be 
moulded into nny form you choose to give them. 
This has been remarkably well expressed in a 
foreign periodical work. * " Tout est lie dans 
" les dispositions morales et dans les habitudes 
" de I'homme. Un travail qui met de I'ordi-c 

* La Bibliothcquc Universelle. 


** dans les idees, prepare a I'ordre dans hi con- 
" duitc. L'excrcise dc I'atlention Ja fbrtifit-, et 
" par elle le jugenient ct la meiuoire, les deux 
" tiicultes les plus usuelles dans les affaires de la 
" vie. L'instruction relimeusc et morale infusees 
" dans I'esprit et dans le coeur dcs enfans, a mesure 
" que les notions elementaires des lettres leur 
" dcviennent faniilieres; la discipline et la regie 
" qu'il est facile d'introduire dans les ecoles, les 
*' fa9onnent aux devoirs dont I'accomplissement 
" assure le maintien de I'ordre social, en mcme 
" temps que le bonheur des individus qui s'y 
" soumettent. Des hommes eleves de cette ma- 
*' niere sont non-seulement plus intelligens, plus 
'* aptes a saisir ct appliqucr les idi'cs utiles, plus 
" cconomes, plus laborieux, que ceux qui sont 
" demeures ignorans ; mais ils sont aussi plus 
" moderes, plus patiens, plus sages, plus jlistes. 
" Tous les rapports, dans I'interieur des families, 
" en ont plus de douceur ct deforce; rinfluence 
*' des parens est plus marquee et plus durable; 
" le loisir n'est point acconipagnc des inconve- 
" niens qu'il a pour lis hommes illitcrds ; les rc- 
" lations de voisinage sont signak'is par plus 
" d'egards, et cclles de rinteret par plus d'equite," 
But independently of schools, and the various insti- 
tutions for the education of youth, there is an esta- 
blishment among the lower classes which is pecu- 
liarly calculated to inculcate lessons of prudence and 


L'couoniy. I mean tlie Benefit Clubs, or PVieiully 
Societies ; the members of which, by contributing 
a small stipend monthly, accunmlate a fund which 
furnishes them relief and aid in times of sickness ov 
distress. These associations have spread through- 
out the country, and their good effects are rendered 
evident by comparing the condition of such of the 
labouring classes as belong to them with those of 
the same district who have no resource in times of 
distress, but parochial relief or private charity. 
The former are comparatively cleanly, industrious, 
sober, frugal, respecting themselves, and respected 
by others; depending in times of casual sickness or 
accident on funds created by their own industr};, 
they maintain an honourable pride and independ- 
ence of character ; whilst the latter, in a season of 
distress, become a prey to dirt and wretchedness ; 
and being dissatisfied with the scantiness of parish- 
relief, they arc ollen driven to the commission of 
crimes. It is above a century since these clubs 
were first instituted; they received encouragement 
both from government and individuals, and have 
spread throughout the country. I dare say that 
your prudent gardener Thomas is a member of one 
of them. 


Yes ; and he belongs to one which can boast of 
peculiar advantages, as most of the gentlemen in 



the neighbourhood subscribe to it; in order by in- 
creasing the fund, and consequently the amount of 
the relief which the distressed members can receive, 
to encourage the poor to belong to it. 

MRS. B. 

That is an excellent mode of bestowing charity, 
for you are not only sure that you relieve the ne- 
cessitous, but also the industrious poor. A similar 
plan has been adoj)ted, within these few years, in a 
village in the neighbourhood of London, and has 
been attended with the jrrcatest success. Various 
schemes had been devised by the charitable inha- 
bitants of this village to relieve the necessities of 
their poor, and so much was done for them by the 
opulent, that they found little need to exert their 
own industry; whilst the poor in the neighbouring 
parishes, attracted by the munificence of the cha- 
ritable donations, flocked to tlie place ; so that, 
notwithstanding all their bounty, the rich still found 
themselves surrounded by objects of penury and 
distress. Convinced at lenj^th that they created as 
much poverty as they relieved, they came to a re- 
.solution of complelely changing their system. They 
established benefit clubs, and the sums which they 
before gave away in alms, were now subscribed to 
these societies, so as to afford very ample relief to 
its members in cases of distress. The consequence 


was, that the idle poor abiiiidoiied ihe pluce, and 
the industrious poor were so well provided lor, thai 
the village lias assumed (jiiite a new aspect, and 
})enury and want are scarcely any more to be 

An institution has within a short time been e.-i- 
tablishetl in Scotland, and is, I understand, now 
rapidly spreading in England, which is likely to 
prove still more advantageous to tlie lower classes 
than the benefit clubs. " The object of this in- 
" stitution," says the Edinburgli Review, No. 4U., 
" is to open to the lower orders a place of deposit 
" for their small savings, with the allowance of a 
" reasonable monthly interest, and with full liberty 
" of withdrawing their money, at any time, either 
" in whole or in part, — an accommodation which 
*' it is impracticable for the ordinary banks to fur- 
" nish. Such an establishment lias been called a 
" Saving Bank" 

These institutions afford the greatest encourage- 
ment to industry, by securing the property of the 
labouring poor. How fre(jucntly it happens that 
an industrious man, after having toiled to accumu- 
late a small sum, is tempted to lay it out in a lottery 
ticket, is inveigled by sharpers to a gambling table, 
or induced by adventurers to engage in some ill- 
judged and hazardous speculation ; to lend it to a 
distressed or a treacherous friend, — not to mention 
the risk of its being lost or stolen. If wc succeed 


in ciitablishiiig banks in dilVcrent districts in Eng« 
land, where the poor may without difficulty or 
trouble deposit the trifle they can spare from their 
earnings, and wlicrc, aa an additional inducement, 
some interest is allowed them for their money, all 
this mischief will be avoided, and we may hope that 
the influence of prudential habits will help to raise 
the poor above the degrading resource of parochial 
assistance, and prepare the way for the abolition of 
the poor-rate — a tax which falls so heavily on the 
middling classes of people, and which is said to give 
rise to still more poverty than it relieves. 


I cannot understand that. 

MRS. B. 

The certainty that the parish is bound to succour 
their wants, renders the poor less apprehensive of in- 
digence than if they were convinced that they must 
suffer all the wretchedness it entails. When a 
young man marries without having the means of* 
supporting his family by his labour, and without 
having made some little provision against accidents 
or sickness, he depends upon the parish ;is a never- 
failing resource. A profligate man knows that if he 
spend his wages at the public-house instcatl of pro- 
viding for his family, his wife and children can at 
worst but go to the poor-house. rarish-reU«i thus 



becomes the very cause of the miscbict' which, it 
professes to retncdy. 


It appears to me to encourage the worst species 
of poverty, that arising from idleness and ill 

JMus. n. 

The greatest evil that resuhs from this provision 
for the poor is, tiiat by encroachin*!; on the funds 
destined for the maintenance of hibourers, it tii- 
minishes the demand for laiiour, and consc(juently 
lowers wages. \\' hilst therefore, on the one hantl, 
the poor-rate raises up a population wliich requires 
work to maintain it, on the other, it curtails the 
means by which it is employed. The poor-rate be- 
stows in the form of alms, and but too frcijuently on 
the idle and profligate, that wealth which should be 
the reward of active industry; if the amount of the 
poor-rate were added to the circlating capital of the 
country, the independent labourer might earn a 
better livelihood for himself and his family than he 
can now do; and, without the degrading resource 
of parish relief, might lay by a portion to provide 
for sickness and old age. 

When it was once proposed to establish a poor's 
rate in France, the committee of mendicity, in re- 
jecting it, thus expressed themselves on that of 
England : 


•* C'c't cxenipK' est iiiicgraiitlc el iinportantc lero)> 
' pour nous, car iiKlcpcndamment ilcs vices qu'elle 
• nous {ircseute ct d'une dcpensc nioiistreusc, et 
*' d'un encouragement neccssaire d la laineantisc, 
•' elle nous decouvre la plaic politique de I'Angle- 
** terre la plus devorante, (ju'ii est egalenient dan- 
*' gereux pour sa tranquillite, ct son bonhcur, de 
*' detruire ou de laisscr subsister." 


But wliat is to be done; the poor cannot be al- 
lowed to starve, even when idle anti \!(ious? 

MRS. K. 

Certainly not ; and besides the wife and cliil- 
dren of a profligate man are otten the innocent 
victims of his misconduct. Then there are fre- 
(juentlv cases of casual tlistress, which no prutience 
could foresee nor guartl; under these cir- 
cumstances the poor-rate could not be al^olished 
•without occasioning the nio.-t cruel distre!«^. I 
know therefore of no other remedy to this evil 
than the slow and gradual effect of education. By 
enlightening the minds of the lower classes their 
moral habits are improved, and they rise above 
that state of degradation in which all feelings of 
dignitv and independence are extinguished. 


J3ut, ala> ! how many years will eJapsi- b«'lorc 
J A 


these liappy results can take pUce. I am impa- 
tient that benefits should be immediately and uni- 
versally diffused ; their progress is in general so 
slow and partial, that there is but a small chance 
of our living to see their effects. 

MRS. B. 

There is some gratification in looking forwani 
to an improved state of society, even if we should 
not live to witness it. 


Since it is so little in our power to accelerate its 
progress, we must endeavour to be contented: but 
I confess that 1 cannot help regretting the want ot 
sovereign power to forward measures so conducive 
to the happiness of mankind. 

MRS. B. 

Vou might possibly fail in your projects by at- 
tempting too much. The Emperor Joseph II. 
endeavoured at once to transform a bad govern- 
ment into a good one, and by adopting arbitrary and 
violent measures to accomplish his jiurpose, without 
paying any regard to the habits and manners, the 
prejudices and ignorance of his subjects, created 
ill-will and opposition, instead of co-operation ; 
and ended by leaving them but little more ad- 
vanced than he found them. I cannot too often 

ON THK lONDiriOS Ol THli POOH. I 75 

repeat to you that gradual improvement is always 
pretcrablc, aiul more likely to be i>ernianent than 
that wliich is effected by sudden revolution. 

But of" all juodes ot" bestowing charity, that of 
indiscriminate alms is the most injudicious. It en- 
courages both idleness and imposition, and gives 
the bread which should feed the industrious poor, 
to the indolent and profligate. By affording cer- 
tain support for beggars, it trains up people to 
those wretched means of subsistence as regularly 
as men are brought up to any respectable branch of 
industry. This is more especially notorious in Ca- 
tholic countries, where alms-giving is universally 
considered as a religious duty ; and })articularly in 
those towns in which richly endowed convents and 
religious establishments dispense large and indis- 
criminate tlonations. 

Townsend, in his travels in Spain, tells us, that 
*' The Archbishop of Grenada once had the cu- 
*' riosity to count the number of beggars to whom 
"' he daily distributes bread at his doors. Ho 
" found the men 2000, the women 3024, but at 
" another time the women were 4000. 

" Leon, destitute of commerce, is supported by 

" the church. Beggars abound in every street, all 

" ted by the convents and at the bishop's palace. 

'• Here they get their breakfast, there they dine. 

• Beside food at St. Marca's, they receive every 

■ other day, the men a farthing, the women and 

i 1 


" cliildren half ae much. On this provision they 

" hve, they marry, and they perpetuate a miserable 

" race. Were it possible to banish poverty and 

" wretchedness by any otlier means than by in- 

" dustry and unremitted application, benevolence 

" might safely be permitted to stretch forth the 

" hand, and without distinction to clothe the naked, 

" feed the hungry, give drink to the thirsty, and 

" furnish habitations to the desolate. But the 

" misfortune is, that undistinguished benevolence 

*< offers a premium to indolence, prodigality, and 

" ^ice." 


All this is very true : but you must allow that it 
is extremely painful to pass, so frequently as we do, 
objects of distress in the streets, without affording 
them some triflinrj assistance. 

MR». B. 

I cannot blame any one for indulging feelings 
of humanity ; to pity and relieve the sufferings of 
our fellow-creatures is one of the first lessons 
which nature teaches us : but our actions sshouid 
be regulated by good sense, not blindly directed 
by undistinguishiug compassion. \Vc should cer- 
tainly consider it as a duty to ascertain whether the 
object whom we relieve is in real want, and we 
should proportion our charity not only to his dis- 
tress, but also to hi> merits. We ought to do much 


Jiiove for ail industrious family, whom unforeseen 
or unavoidable accidents have reduced to poverty, 
than for one who has broufjht on distress through 
want of a well-i-egulated conduct. When we relieve 
objects of this latter description, it would be well 
at the same time to bestow^ a trifling reward on 
some individual amonfj the Jabourinfj classes of the 
neighboiirhood distinguished for his industry and 
good conduct. This would counteract the perni- 
cious effect which cannot fail to be produced by 
assisting the indolent, whilst wo suffer the indus- 
trious to remain without reward. 


But the advantaj^os and comforts derived from 
industry constitute its natural recompense, and it 
seems to require no other reward. 

MRS. B. 

Nor would it, if a similar result could not be ob- 
tained without effort; but when a hard-wcrkins: 
labourer observes that the family of his idle neigh- 
bour is as well provided for as his own — that the 
hand of charity supplies them with what he earns 
by the sweat of his brow — such reflections are apt 
to produce discontent, and tend to check his in- 
dustry. While, therefore, we tacitly encourage 
idleness by relieving the (fistress it produces, we 
^t the same time discourage that laborious industn'^ 
I 5 


which passes unnoticed. The vahie of pecuniary 
rewards is increased by their being bestowed as 
a mark of approbation ; so far from exciting a 
sense of humiHating depcndance, they produce a 
feeling of a very opposite nature, which raises and 
improves the character — a consciousness of merit 
seen and approved by those to whom the poor look 
up. Such sentiments soften whilst they invigorate 
the labours of the industrious. Thus if help for 
the distressed, and rewards for the meritorious poor 
were to go hand in hand, the one would do as 
much towards the prevention of poverty as the 
other towards relieving it. 


I had an opportunity last siunmer of witnessing 
a mode of improving the condition of the labour- 
ing poor, in which the system of rewards was intro- 
duced with the happiest effect. An extensive jiiece 
of ground was laid out in gardens by a great landed 
proprietor in Hertfordshire, for such of his la- 
bourers as had none attached to their cottages. 
He let the ci'ound to them at the low rate of six- 
pence a-year each. These gardens were sufficiently 
laige to provide an ample supply of common ve- 
getables for the labourer's family, and to employ 
his leisure hours in its cultivation ; but not so ex- 
tensive as to tempt him to withdraw his attention 
from his daily labour, and render the produce an 


article of sale. As a further means of exciting 
industry, the proprietor annually distributes three 
prizes as rewards to those whose gardens are found 
to be in the highest state of cultivation. This 
judicious mode of rewarding industry has been 
beneficial also in producing a spirit of emulation 
amongst the rival gardeners, whose grounds being 
separated only by paths, the comparative state of 
t*ach is easily determined. 

MRS. B. 

This is indeed an excellent plan ; the leisure 
hours which tlie labourers might probably have 
passed at the alehouse are occupied in raising an 
additional stock of wholesome food, and the money 
which would have been spent in drinking is saved 
for a better purpose — it may form perhaps the 
beginning of a capital, and in process of time 
secure a little independence for himself and his 

1 G 










MRS. B. 

In oiir Ja^t conversation we have in some mea- 
sure digressed from our subject; but I trust thai 
you liave not forgotten all we have said upon the 
accumulation of capital. Let us now proceed to 
examine more specifically the various modes in 
which it may be employed in order to produce a 
revenue or income. Capital may be invested ; 


In Agriculture, 

Manufactures, utiJ 


Of all these ways of employing capital, agricul- 
ture, no doubt, must be the most advantageous to 
the country, as it produces the first necessaries of 

iMRS. B. 

In these northern climates it is almost as essen- 
tial to our existence to be clothed and lodged as to 
be fed ; and manufactures are, you know, requisite 
for these purposes. 


True; but then agriculture has also the ndvan- 
Umc of furnishirm the raw materials for nianufac- 
turcs ; it is the earth which supplies the produce 
with which our cloaths are made and our houses 

MRS. B. 

Yet without manufactures these mp.tcrials would 
not be produced ; it is the demand of the manufac- 
turer for such articles which causes them to be raised 
by the farmer; agriculture and manufactures thus 
re-act on each other to their mutual advantage. 

1S2 ox REVENUE. 


It may be so; but still it does not appear to nie 
tliat they can be equally beneficial to the country. 
Manufactures do not, like agriculture, actually 
increase the produce of the earth ; they create 
nothing new, but merely put together under an- 
other form the materials with which they are suj)- 
plied by agriculture. 

MRS. B. 

True : but by such operations they frequently in- 
crease the value of these materials an hundred fold. 
The powers of man in processes of art, are unques- 
tionable inferior to those of nature, in the produc- 
tion of vegetation ; for its operations consist not 
merely in a new system of chemical or mechanical 
combinations, but in the formation of organised 
bodies, endowed with the principles of life and of 
reproduction. You are mistaken, however, if you 
suppose that, in agriculture, any more than in ma- 
nufactures, a single new particle of matter is created ; 
it is merely by a new system of arrangements per- 
formed in that great laboratory of nature, the bo- 
som of the earth, in a manner which eludes our 
observation, that the wonders of vegetation are de- 


But in agriculture nature f.icilitatcs the labours 
of man ; she seems to work together with the hus- 


ON HF.vrNirE. \S3 

Uandiuan; ami pioviclt-d iliat lie but ploughs the 
fjeki Hiul sows the seed, she performs all tiie re- 
mainder of the task. It is nature that unfolds the 
f^erm, and raises up the plant out of the ground; 
she nourishes it with genial flowers, she ripens it 
with sun-beams, and leaves the farmer little more 
to do than to gather in the fruits of her labours. 

How different is the case in manufactures ! 
T/iere man must perform the whole of the work 
himself; and notwithstanding the aid he derives 
from his mechanical or chemical inventions, it is 
all the result of his own toil ; whether it be the la- 
bour of the head or the hands, it is all art. 

.MKS. B. 

We are accustomed to speak of art in opposition 
to nature, without consitlering that art itself is 
natural to man. A state of nature in the human 
species, is a course of progressive improvement. 
Man is endowed with the faculties of invention and 
contrivance, which give him a considerable degree 
of command over the powers of nature, and i-cnder 
them in a great measure subservient to his use. 
He studies the peculiar properties of bodies in 
order to turn them to his advantage; he observes 
that light bodies float on the surface of the water, 
and he builds himself a boat ; he feels the strength 
of the wind, and he raises sails ; he discovers the 
powers of the magnet, and he directs his course by 


it to the most distant shores: but the water which 
supports the vessel, the wip.d which wafts it on, 
and the magnet which guides it, are all natural 
agents compelled by the art of" man to serve his 

We cannot, therefore, say that it is in agricul- 
ture alone that nature lends us her assistance. The 
miller is as much indebted to nature for grinding 
his corn as the farmer is for raising it. In manu- 
factures her share of the labour is sometimes even 
more considerable than in agriculture. You may 
recollect our observing that the effect of machinery 
in facilitating labour, consisted chiefly in availing 
ourselves of the powers of nature to perform the 
principal part of the work ; and there arc some 
chemical j/i'ocesses of art for which we seem almost 
wholly indebted to nature. In bleaching, it is the 
air and light which perform the entire process; in 
the preparation of fermented li(juors, we are igno- 
rant even of the means which nature employs to 
accomplish this wonderful operation. In short, it 
would be difficult to appoint out any species of 
labour in which nature did not perform a share of 
the task. 


That is very true ; and it requires only a little 
reflection to discover how much we owe to her 
assistance in every work of art. We could not 
make a watch without the property of elasticity 


natural to steel, which enables us to construct a 
spring; nor could the spring be fabricated without 
the natural agency of fire, rendered subservient 
* > art. 

But, Mrs. B., in agriculture we avail ourselves of 
machinery as well as of those secret operatior>s of 
nature which produce vegetation. 

MRS. B. 

Undoubtedly we do; for every tool which fa- 
cilitates manual labour is a machine — the spade 
and hoe, which save us the trouble of scratching 
up the earth with our hands — the plough and 
harrow, which still more facilitate the process — 
the flail, which prevents the necessity of rubbing 
lut the corn — and the threshing-machine, whicli 
.igain diminishes the labour. Machinery is, 
iiowever, not susceptible of being applied to rural 
occupations with the same degree of perfection as 
to the arts, because the processes of agriculture are 
extremely diversified, carried on over an extensive 
space, and dependant to a very considerable degree 
OH the vicissitudes of the seasons, over which we 
have no control. 

Agriculture, manufactures, ;uui commerce, are 
all essential to the well being of a country ; ai\d the 
question is not whether an exclusive preference 
sluiuld be given to any one of iliesi' luvinchos of iu- 
dustrv, but what are tlie pr()poriit)us which they 

186 0\ REVENUE. 

slioukl bear to each otlier in order to coiulucc most 
to the prosperity of" the commuity. 


That is all I ask. I never imagined that every 
other interest sliould be sacrificed to that of agri- 
culture ; but I feel persuaded that in this country 
at least, trade and manufactures meet with greater 
encouragement than agriculture. 

MRS. B. 

That is a point on which I cannot pretend to 
decide; and when you are a little better acquainted 
with the subject, you will be more aware of its 


But surely political economists ought to know 
in what proportions the capital of a country should 
be distributed among these different branches of 
industry ? 

MR9. B. 

It is not easily ascertained ; because those pro- 
portions vary exceedingly in different countries, 
according to their local situation or pecuUar circum- 
stances. In America, for instance, or any new 
country in which land is cheap, population but 
thinly scattered, and capital scarce, the prevailing 
branch of industry will be agriculture. For in such 
countries, when a labourer accumulates a little 


money, which (where wages are so high) he is soon 
enabled to do, he is immediately tempted by the 
cheapness of land, to lay it out in a farm ; and 
though the wealth of the Americans is so rapidly 
increasing, they have hitherto found it more advan- 
tageous to import the greater part of their manu- 
factured goods, than to establish manufactures at 
home, a circumstance not so much to be ascribed 
to a deficiency of capital, as to their having a more 
profitable use for it. 


And in England, where the population is abun- 
dant, and land comparatively scarce, we must find 
it advantageous to take their corn in excliange for 
our manufactures. 

MRS. B. 

No doubt ; if old countries were not to purchase 
elsewhere some part of the agricultural produce 
they consume, new countries would not raise more 
than they required for their own consumption, for 
want of a foreign market to dispose of it. 

In this country where land is dear, if a labourer 
make a little money, he never thinks of purchasing 
land ; he cannot even afford to rent a farm ; but 
he may set up a shop, or invest his capital in a 

There are other circumstances which affect the 


destination of capital ; such as the local situation oi 
a country: if it abound with rivers and sea-ports, 
as is the case witii England, so great a facility lor 
the disposal of its manufactures in foreign parts, 
will render that branch peculiarly advantageous. 


So then if agriculture suits one couuti-y be^t, 
manufactures are more profitable to another, and 
thus they mutually accommodate each other .'' 

MRS. B. 

Exactly. If in England the prc>portion of capi- 
tal employed in maiuifactures be more than is 
requisite for our own use, it is because we find our 
advantage in suj)plying other countries with manu- 
factui'cs in exchange for their produce, and that 
advantage arises from our being able to import it 
cheaper than we could produce it at home. Agri- 
culture thus leads to manufactures and trade, as 
youth leads to manhood ; the progress of the former 
is the most rapid, the latter adds the vigour and 
stability of mature growth. Gamier, in his intro- 
duction to his French edition of Adam Smith's 
Essay, remarks on this subject, ihat, 

" It is almost in every in lance an idle refine- 
" ment to distinguish between the labour of those 
" employed in agriculture, and those employed 
" in manufactures and commerce; for wealth is 

ON llEVENUE. 18d 

" necessarily the result of both descriptions of la- 
" hour, and consumption can no more take place 
" independently of the one tiian of the other. It 
" is by their simultaneous concurrence that any 
*' thing becomes consumable, and of course that 
" it comes to constitute wealth. The materials of 
" all wealth originate in the bosom of the earth, 
" but it is only by the aid of labour that they can 
" ever truly constitute wealth ; it is industry and 
" labour which modify, divide, and combine the 
" various productions of the soil, so as to rentier 
"' them fit for consumption." 


But, Mrs. B., though political economists cannot 
specify the proportion of capital which should be 
employed in these several branches of industry, 
have they no means of judging whether it is ac- 
tually distributed in that proportion which is most 
conducive to the welfare of a country ? Men follow 
their own taste and inclination in the employment 
of their capital, and I fear the public benefit has 
very little weight in the scale. 

MRS. li. 

Fortunately there is a better <ruide than mere 
inclination to regulate our choice in the employ- 
ment of capital, and i/ial is, i>i/crcs/. Men arc' in- 
duced to invest their capital in those branches o( 


industry which yield tlie greatest prufits; and ilic 
greatest profits are afforded by those employnieiil> 
ol' which the country is the most in need. 


I do not exactly understand why there should be 
such a perfect coincidence between the wants ot" the 
public and the interest of the capitalist ? 

MRS. B. 

1l\\c public are willing to give the highest price 
for things of which they stand in greatest need. 
Let us suppose there is a deficiency of clothing for 
the people ; the competition to obtain a portion of 
it raises the price of clothing, and increases the 
profits of the manufacturer of clothes. What will 
follow ? Men who are making smaller profits by 
the cultivation of land will transfer some of their 
capital to the more advantageous employment of 
manufacturing clothes ; in consequence of this more 
clothes will be made, the deficiency will no longei' 
exist, the eager competition to purchase them will 
subside, they will fall in price, and reduce the pro- 
fits of the manufacturer to those of agriculture — 
or should these profits fall still lower, the farmer 
Avill take back the capital he had placed in manu- 
factures to restore it to agriculture. 

ON REVENirr:. i;u 


But a total cliaiiiie of business is not easily ac- 
coniplished, the skill and experience acquired in one 
branch of industry might be quite useless in another; 
then the machinery of manufactures can no more 
be converted into implements of husbandry, than 
the latter could be rendered serviceable to the ma- 
nufacturer. I should suppose that a farmer could 
not transfer his capital to manufactures or trade, 
nor a manufacturer or merchant to agriculture, 
but under disadvantages almost insuperable. 

MRS. B. 

Nor is this requisite in order to restore the level 
of profits when its variations are slight or tempo- 

In all rich countries there arc many persons who 
live on the income produced by lending their mo- 
ney at interest, and there arc few merchants or 
manufacturers who limit their dealings to the em- 
ployment of their own capital without having re- 
course to the loans of these monicd men. When 
the profits of any particular branch of industry arc 
found to be rising above the common level, those 
engaged in it are induced to borrow more in order 
to enlarge their dealings, whilst some other branch of 
industry which experiences u diminution of profit^ 
contracts its dealings and discontinues borrowing. 


Mr. Ricardo observes*, that " When the demand 
*' for silks increases, and that lor cloth diniini^iics. 
" the clothier does not remove with his capital to 
" the silk trade, but he dismisses some ofhiswork- 
" men, he discontinues his demand for the loan 
" from bankers and monied men ; while tiie ca>e 
" of the silk manufacturer is the reverse : he 
" wishes to employ more workmen, and thus his 
*' motive for borrowing is increased: he borrows 
*' more, and thus capital is transferred from one 
" employment to another, without the necessity 
*' of a manufacturer discontinuing his usual occu- 
'* pation." 


Then the profits of agriculture and manufactures 
will always be, or at least tend to be, upon a footing 
of equality ? 

MRS. B. 

Yes; tend tv be ; that is a very i)ropcr qualifica- 
tion, for these changesare not produced on a sudden. 
The tendency to equalisation of profits takes place 
not only in agriculture and manufactures, but in 
every other branch of industry. In a country 
where capital is allowed to follow its natural course, 
it will always flow into that channel which affords 
the highest ]nofits, till all employments of capital 
are nearly upon the same level. 

* Principles of Political Economy, p. 84. 



You say nearly, why not exactly the siitue / 

MRS. B. 

Because, generally speaking, agricultural piu- 
suits are more congenial to the tastes of the majority 
of mankind than manufactures or commerce : and 
hence in countries where fertile land is to be ob- 
tained at an easy rate, a man no sooner acquires a 
little capital than he is desirous of purchasing land, 
and retiring even to remote and almost unpeopled 
districts, where he can live as the lord of his little 
domain; as is the case in America at present. 
Yet this preference will not lead beyond a certain 
limit, therefore it may be stated that the profits 
of different employments of capital are nearly upon 
.1 level. 


How admirably nature makes all her arrange- 
ments ! The more I learn of pohtical economy, the 
more it appears to me, that the institution of laws 
which control her operations are generally pro- 
ductive of greater evil than good. 

MRS. B. 

That may frequently be the case, but gcnnally 
i> too conij)rehensivc a term. Every law that is 
jnaclcd infringes more or less upon the natural 


order of things; and yet I should not liesitate to 
say that the worst system of laws is preferable to 
no government at all. Art, wc have observed, is 
natural to man ; it is the result of reason, and 
leads him onwards in the progressive path of im- 
provement. Instead of being chained down like 
the brute creation by instinct, he is free to follow 
where inclination leads. But as soon as he enters 
into a state of society he feels the necessity of a 
control which nature has not imposed, and his 
reason enables him to devise one. He enacts laws, 
which are more or less conducive to his good in 
proportion as his rational faculties are developed 
and cultivated. Many of these laws, no doubt, arc 
inimical to his welfare; yet the balance upon the 
whole is in their favour ; the advantages resulting 
irom the single law of the institution of property 
has confewcd a greater benefit on mankind than 
all the evils which spring from the worst system of 


But this level — this equality of profit to which 
you say every branch of industry naturally tends, 
cannot yet have taken place in England, sincij 
nuuiufactures and trade are here allowed to yield 
greater profits than agriculture. 

MRS. n. 
^'ou arc mistaken hi that opinion. It is true 


tliat it is more common to see merchants and nisi- 
nutacturcrs accumulate large and rapid tbrtunes 
than farmers. They are a class who generally em- 
ploy capital upon a more extensive scale, hence their 
riches make a greater show. Yet, upon the whole, 
trade and manufactures do not yield greater profits 
than agriculture. 


I cannot understand why the merchant and nui- 
nufacturer should grow richer than the farmer un- 
less they make larger profits. 

MRS. B. 

You must observe that though a farmer does not 
so frequently and rapidly amass wealth an a mer- 
chant, neither is he so often ruined. The risks a 
man encounters in trade are much greater than in 
farming. The merchant is liable to severe losses 
arising from contingencies in trade, such as war, 
changes of fashion, bad debts, which scaicely 
aflect the farmer ; he must thcrelbre have a chance 
of making proportionally greater profits. 


That is to say, that the chances of gain jiiu>t 
balance the chances of loss ? 

MRS. B. 

Yes; the merchant plays for a larger stake. If 
K 2 


therefore he be so skilful or so fortunate as to 
make more than his average share of gains, he will 
accumulate wealth with greater rapidity than a 
farmer ; but should either a deficiency of talents or 
of fortunate circumstances occasion an uncommon 
share of losses, he may become a bankrupt. 


But, Mrs. B., you should, on the other hand, 
consider that the farmer is exposed to the risk 
attending the uncertainty of the seasons, a cause 
which is continually operating, and over which we 
have no control. 

MRS. B. 

Yet, in these climates, the loss occasioned by 
such causes are seldom attended with ruinous con- 
sequences ; for seasons which prove unfavourable to 
one kind of produce are often advantageous to an- 
other. And besides, the produce of agriculture 
consisting chiefly of the necessaries of life, the de- 
mand for it cannot well be diminished, and the 
price rises not only in proportion to the scarcity, 
but even higher, so that farmers frequently make 
the greatest gains in a bad harvest. 

We may then conclude that though agriculture, 
manufactures, and trade, do upon the whole afford 
similar profits, these profits arc, amongst fiirmcrs, 
more equally shared than amongst merchants and 


nwnufacturcrs, some of whom amass immense 
wealth, whilst others become bankrupts. 

The rate of profit, therefore, upon any employ- 
ment of capital is proportioned to the risks with 
which it is attended ; but if calculated during a 
sufficient period of time, and upon a sufficient 
number of instances to affiard an average, all these 
diffisrent modes of employing capital will be found 
to yield similar profits. 

It is thus that the distribution of capital to the 
several branches of agriculture, manufactures, and 
trade, preserve a due equilibrium, which, though 
it may be accidentally disturbed, cannot, V>hllst 
allowed to pursue its natural course, be perma- 
nently deranged. If you are well convinced of this, 
you will never wish to interfere with the natural 
distribution of capital. 

You must not, however, consider this general 
equality of profits as being fixed and invariable, 
even in countries where government does not in- 
terfere with the direction of capital. A variety of 
circumstances occasion a temporary derangement 
of it. The invention of any new branch of in- 
dustry, or the improvement of an old one, will 
raise the profits of capital invested in it; but no 
sooner is this discovered, than others, who have 
capital that can be diverted to the new employ- 
jnent, engage in this advantageous concern, niul 
competition reduces the profits to their due pro- 
K 3 



portion. A remarkably bad harvest may occa- 
sionally raise the rate of agricultural profits, or a 
very abmidant season reduce them below their level. 
The opening of a trade with a new country, or the 
breaking out of a war which inipedes foreign com- 
merce, will affect the profits of the merchant : but 
these accidents disturb the equal rate of profits, as 
the winds disturb the sea ; and when they cease, it 
returns to its natural level. 










I HAVE been rcflecliiig much upon the subject of 
revenue, Mrs. B. ; but I cannot comprehend how 
larmers can afford to pay their rent if they do not 
make more than the usual profits of capital. 1 
had imagined that tliey began by raising greater 
proiluce from the same capital than merchants or 
K 4 


manufacturers, but that the deduction of their rent 
eventually reduced their profits below those ot 
-other branches of industry. 

MRS. B. 

You were right in the first part of your conjec- 
ture, but how did you account for the folly of 
farmers in chusing a mode of employing their capi- 
tal which after payment of their rent yielded them 
less than the usual rate of profit ? 


I believe that I did not consider that point. I 
had some vague idea of the superior security of 
landed property ; and then I thought they might 
be influenced by the pleasures of a country life. 

MRS. B. 

Va2ue ideas will not enable us to trace inferences 
with accuracy, and to guard against them we should 
avoid the use of vague and indeterminate expres- 
sions. For instance — when you speak of the secu- 
rity of landed property being advantageous to a 
farmer, you do not consider that in the capacity of 
farmer a man possesses no landed property ; he rents 
his farm ; if he purchases it, he is a landed proprie- 
tor as well as a farmer. It is not therefore the 
security of landed property which is beneficial to a 


farmer, but the security or small risk in the raising 
and disposing of his crops. 

A fanner, when he reckons his profits, takes his 
rent into consideration ; he calculates upon making 
so much by the produce of his farm as will enable 
him to pay his rent besides the usual profits of his 
capital ; he must expect therefore to sell his crops 
so as to afford that profit, otherwise he would not 
engage in the concern. Farmers then really pro- 
duce more by the cultivation of land than the 
usual rate of profit ; but they are not greater gain- 
ers by it, because the surplus is paid to the landlord 
in the form of rent. 


So then they are obliged to sell their produce 
at a higher price than they would otherwise do, in 
order to pay their rent ; and every ]ioor labourer 
who eats bread contributes towards the mainte- 
nance of an idle landlord? 

MRS, B. 

You may spare your censure, for rent does not 
increase the price of the produce of land. It is 
because agricultural produce sells for more than it 
cost to produce, that the farmer pays a rent. Rent 
is therelorc the cjfcct and not the cuiise of the high 
price of ngricultural produce. 
K 5 


That is very extraordinary ! If landed proprie- 
tors exact a rent for their farms, how can farmers 
afford to pay it, unless they sell their crops at a 
tigher price for that purpose ? 

MRS. B. 

A landlord cannot exact what a tenant is not 
willing to give ; the contract between them is volun- 
tary on both sides. If the produce of the farm can 
be sold for such a price as will repay the farmer the 
usual rate of profit on the capital employed, and 
yet leave a surplus, farmers will be found who will 
willingly pay that surplus to the landlord for the 
use of his land. 


But if the profits of agriculture are not the efJect 
of rent, M'hy are they not reduced by competition, 
and brought dovni to the usual rate of profit ? 
Why does not additional capital flow into that 
channel, and by increasing the supply of agricultu- 
ral produce reduce its price ? 

MRS. B. 

Agriculture is not susceptible of an unlimited 
augmentation of supply, like manufactures. If 
hats and shoes are scarce, and sell at extraor- 
dinarily high prices, a greater number of men will 
^ct up in the hat and shoe making business, and by 


increasing the quantity of those commodities re- 
duce their price. But land being limited in extent, 
larniers cannot with equal facility increase the 
quantity of corn and cattle. It might however be 
done to a very considerable extent by improvements 
in husbandry, and bringing new lands into cultiva- 
tion. But to whatever extent this were accom- 
plished, it would not have the effect of permanently 
diminishing the price of those commodities which 
constitute the necessaries of life, because population 
would increase in the same proportion, and the 
additional quantity of subsistence would therefore 
be required to maintain the additional number of 
people ; so that there would remain (after allowing 
a short period for the increase of population) the 
same lelative proportion between the supply and 
the demand of the necessaries of life, and, conse- 
(juently, no permanent reduction of price would 
take place. The necessaries of life therefore differ 
in this respect from all other commodities ; if hats 
or shoes increase in plenty they fall in price, but 
the necessaries of life have the peculiar property of 
creating a demand in proportion to the augment- 
uion of the supply. 


But what is it that makes agricultural produce 
sell at so high a price as to afford a rejit? If it is 
K 6 


jiot rent that occasions tlic high price, there must 
be some other cause for it. 

MRS. B. 

There are several circumstances which concur to 
raise and maintain tlie price of agricultural pro- 
duce above its cost of production, and enable the 
farmer to pay rent. Its first source is what upon a 
superficial view would seem to have the effect of 
diminishing price; it is that invaluable quality with 
which Providence has blessed the earth, of bring- 
ing forth food in abundance: an abundance more 
than sufficient to maintain the people who cultivate 
it. For if those who occupy the land and raise the 
crops, consumed the whole of them, there would be 
no surplus to sell at any price to others ; and under 
such circumstances it would be impossible that the 
cultivator of the soil should pay rent. But the 
natural fertility of the earth is such as to render 
almost all soils capable of yielding some surplus 
produce which remains after the farmer has de- 
frayed all the expenses of cultivatioD, including the 
profits of his capital. It is from this fund that he 
pays his rent. The quantity of this surplus produce 
varies extremely, according to the degree of fer- 
tility of the soil, and enables a farmer to pay a 
higher or a lower rent. 


But, Mrs. B., in countries newly settled, where 


the greatest choice of fertile land is to ho had, and 
where we are told that the harvests are so produc- 
tive, as in many parts of America, no rent is paid ? 

MRS. B. 

Wherever land is so plentiful that it may be cul- 
tivated by any one who takes possession of it, no 
man will pay a rent. But the cultivator, never- 
theless, makes such a surplus produce as would 
enable hiin to pay rent. The only difference is, 
that instead of transferring it to a landlord, he 
keeps the whole himself. This is the reason that 
such rapid fortunes are made by new settlers, in a 
fine climate and a fertile soil. 

It is the fertility of the soil, then, which enables 
the cultivator to pay a rent; but we must look for 
another cause which induces him to do so. 


You speak as if it were left to his option, Mrs. 
B. ; and if that Avcrc the case, 1 do not think that 
rent would ever be paid. 

MRS. B. 

We shall see presently how far you are right. — 
When a newly settled country, such as the island 
in which we established a colony, augments its 
capital and population, the demand for food will 
increase, its price will rise, and more land will be 
taken into cultivation ; and when all the most fertile 


neighbouring districts arc occupied, soil of an in- 
ferior qualify, or less advantageously situated, will 
be brought under tillage. Now, corn, or any agri- 
cultural produce, rai>ed uj)on less lertile soils, will 
stand the farmer in a greater expense ; more labour, 
more manure, and more attention will be required 
to raise a less abundant crop, and the cost of its 
production will, upon the whole, be greater. 


Tlie original settlers who had the first choice of 
the land have, then, an advantage over the others : 
they will make the greatest prohts, and accumulate 
fortunes soonest. For the several crops, when 
brought to market, if of the same quality, will sell 
for the same price, whatever cliHerence there may 
have been in the cost of their production. Nay, 
it is even likely that the crops which cost the least 
to the farmer, may fetch the highest price ; for the 
rpost fertile soil will, in all probability, yield the 
finest produce. 

WKt>. D. 

The first settlers have also another advantage ,' 
they will have selected the most favourable situ- 
ations as well as tiie most fruitful soil ; their fields 
will flourish on the borders of a navigable river, or 
surround the town which they have built; afford- 
ing them a resource both for a home and a foreign 
market. Whilst those who cultivate land in more 



rcnioic parts must add all the charges of convey- 
ance to the market where the produce is sold, or 
the port from whence it is exported. Let us sup- 
pose that the first settlers make 30 per cent., whilst 
the latter make only 25 per cent, of their capital. 
With tl>e double advantaire of the most fertile soil, 
and free from rent, it is no wonder if the first set- 
tlerti should rapidly amass large capitals, and it is 
not iniprobable that towards the decline of life 
they may be desirous of retiring from the fatigues 
of an active life, yet without wishing to sell their 
property. Under these circumstances, do you not 
think that they would reatlily find new settlers, 
who, rather than undertake to cultivate remote 
districts, of perhaps a still inferior soil, would pay 
an annual sum for the use of their land, and be- 
come their tenants ? 


That is very true : it would answer to the new 
comers to give the 5 per cent, which the first set- 
tlers make above the others, in consequence of 
having the most eligible land. 

MRS. n. 
This, then, is the origin ot" licnl. Il" the tenant 
pay 5 per cetjt., which is ecjaal to one-^ixth of 
what tlie proprietor made by cultivjition, his pro- 
fits will be reiluced to 2"> per cent., anil will consc- 


quently be upon a level with those of the second 
settlers, who remain both proprietors and farmers ; 
and thus the profits of agriculture are reduced 
from 30 to 25 per cent. 


And those of other branches of industry will, I 
suppose, be reduced to the same rate, in order to 
maintain the level of equality of profits? 

MRS. B. 

No doubt. In what manner this is effected, I 
shall explain presently. When the profits of agri- 
culture are 25 per cent., accumulation will still pro- 
ceed with rapidity; ami as the country grows rich 
and po})ulous, the demand for corn will increase, 
and fresh land will be required to be brought into 
cultivation. The new land being either more re- 
mote, or of an inferior quality, will be cultivated 
imdcr still greater disadvantages, and will not 
yield, let us su})pose, above 20 per cent, profits.. 
As soon as this happens, the second settlers will 
be able to obtain a rent for their land. For it will 
be as advantageous to a farmer to pay 5 per cent, 
whilst he makes 25, as to give nothing for the use 
of the land when he makes only 20 per cent, of his 

The goicral profits of capital are thus again re- 
duced, from 25 to 20 per cent. 



lint do not those who first rented land continue 
making 2r> jier cent, by cuhivating it .'^ 

Mils. B. 

On\y as long as their leases last; tor as soon as 
their landlords find that the profits of capital are 
reduced to 20 per cent, they will not allow their 
tenants to make more, but require all the surplus 
profits above that sum to be paid them in the form 
of rent. Thus every fresh portion of land that is 
taken into cultivation, cither of inferior quality or 
less favourably situated, produces the double effect 
of creating additional rents on the land before 
cultivated, and of reducing the profits of capital. 


That I perfectly understand; but how does it 
affect the price of agricultural produce — the high 
price of which, you say, is not owing to rent. 

MRS. B. 

In proportion as recourse is had to land of an 
inferior quality, to provide food for an increasing 
population, the difficulty and consequently the ex- 
pense of producing it is increased. Every new 
tract of inferior soil, therefore, brought mulcr til- 
lage, which raises rents and diminishes profits, will 
also raise the price of raw produce; lor every 
quartern of corn, and loaf of bread, whether growr\ 


on the finest soils at the least cost of production, 
or yielded by land the most unfavourably circum- 
stanced, will fetch the same price in the market. 


That is undoubtedly true; we had already ob- 
served it : but it is curious enough to think that of 
two similar loaves of bread brought on table, the 
cost of production of one of them may perhaps 
have been nearly twice as much as that of the 
other; and that one may have paid three-pence, 
whilst the other has only paid a half-penny towards 
the rent. 

I'he price of raw produce in general is, then, re- 
gulated by the expense of producing it on soils of 
the worst quality, or the most disadvantageously 
situated, which are incapable of paying a rent ? 

MRS. B. 

Yes; provided you include in the cost of pro- 
duction the profits of the farmer, for though the 
worst soils cultivated may not afford a rent, they 
must bring the cultivator a profit ; and if the pro- 
duce of such land ceased to afford him profits, it 
would be thrown out of cultivation. 


l^he high price of agricultural produce results, 
then, from the necessity of raising some portion of 
it at an additional expense on inferior soils? 

MRS. B. 

Yes ; and as this has at the same time the eflect 

' of producing a rent on land of superior quality, 

wc may define rent to be that part of the surplus 

produce of the land which remains after all the 

expenses of cultivation are deducted. 


I think I understand it now perfectly ; when po- 
pulation increiiscs, the new people will eat as hear- 
tily and consume as much as the others, but the 
new land will not yield so much as that before cul- 
tivated; therefore, a greater qhantit)^ of land must 
be turned up to feed a given number of men, more 
labourers will be required to work it, and the cost 
of production being dearer, the price of its crops 
must rise. Under such disadvantages, I only 
wonder that the price of corn, and of raw produce, 
should not be higher than it is. 

MRS. B. 

The natural rise in the price of raw produce, 
owing to the cultivation of inferior soils, is in a 
great measure counterbalanced by other circum- 
stances. If the j)ro(luctive powers of nature diminish 
as we proceed in the cultivation of inferior soils, those 
of art increase, with the progress of wealth. Every 
year improvements are made in agriculture, which 
augment the produce without |)roportioiially in- 


creasing the expenses of cultivation, and enal)lc 
corn to be brought cheaper to market. Besides, 
though land of an inferior quality is at first culti- 
vated at an additional expense, it improves by til- 
lage, so that the cost of production gradually 
diminishes, and by draining, manuring, and other 
ameliorating processes of agriculture, an ungrateful 
soil is in the course of time not unfrequently ren- 
dered fertile. Disadvantages of situation are also 
remedied with the progress of society, the neigh- 
bourhood increases in population, new towns are 
built and new markets opened; if therefore it were 
not indispensably necessary to continue bringing 
fresh land into cultivation to provide for an ever 
growing population, corn would be produced at 
less expense, and would fall instead of rising in 


But if all the surplus produce which remains, 
after the expenses of production are deducted, go 
to the landlord in the form of rent, improvements 
in agriculture will not lower the price of raw pro- 
duce, but will increase the rent. 

MRS. B. 

I beg your pardon ; you have just observed that 
the price of raw produce in general is regulated by 
the expense of producing it on soils of the poorest 
quality, and the most disadvantageously situated; 


therefore, the more wc diminish the expense of 
raising it on such soils, and the more we can re- 
medy the disadvantages of situation, the lower we 
shall fix the standard price of raw produce. T'hc 
cost of production of a loaf of bread raised on 
land of the lowest description is now one shilling ; 
if by improvements in agricultural labour we could 
reduce it to ten-pence, bread in general would sell 
at that price. 


But, Mrs. B., if the profits of the farmer are 
gradually diminished by the natural increase of 
rent, as inferior land is brought into cultivation, 
arc they not on the other hand augmented by the 
enhanced price of agricultural produce? If the land- 
lord require more rent, it is because the farmer 
.sells his crops for more money. One of these 
effects, of increasing cultivation, appears exactly to 
counterbalance the other, and therefore one does 
not see why the farmer's profits should not remain 

MRS. B. 

It is perfectly true that the enhanced price of 
the farmer's crojjs remunerates him for the rise of 
rent. But it is not rent, it is the increased expense 
of production on poorer soils which diminishes his 
profits. You may recollect my explaining to you 
how this occasioned a diminution of profits previous 
to the introduction of rent. 



But this circumstance affects only the cultivator 
of new and inferior land. What is it that dimi- 
nishes the profits of the cultivator of superior soils, 
if it is not the increase of rent ? 

MRS. B. 

The bringing inferior soils into cultivation pro- 
duces a general diminution of profits in all employr 
mcnts of capital, as I will now explain to you. 

The wages of labour, we have observed, arc 
always kept by the capitalist as low as the circum- 
stances of the country will admit. A rise of price 
of agricultural produce, constituting the chief 
necessaries of life, will therefore be followed by a 
rise of wages; provided (you must observe), that 
the rise of price does not proceed from any defi- 
ciency of supply J but from increased expense of 
production. This rise of wages will be permanent, 
because its cause is so; it will affect all those who 
employ labourers, of whatever description ; and it 
is this which occasions a general diminution of the 
profits of capital in all its branches. 


This rise of wages is, then, analogous to that 
produced by accumulation of capital ? 



MRS. B. 

It is not followed by similar consequences; tor 
it neither increases the demand for labour, nor 
does it improve the condition of the labouring 
class. If the labourer receive more wages from his 
employer, it is not because capital abounds, but 
because his maintenance is dearer ; — observe also, 
that the necessaries of life arc dear, not in conse- 
quence of scarcity, but on account of the additional 
labour bestowed on their production. 


I understand that perfectly well ; but as 1 ad- 
vance in the subject, fresh difficulties occur to me. 
So \n ascending a mountain path, we expect on 
rcachinjr the fust eminence that all our difficulties 
will be over; but as we proceed, wc find new sum- 
mits rise in succession, till wc almost despair of 
attaining the highest. 

MRS. B. 

If your metaphor alludes to perfect knowledge, 
it is an eminence we can never expect to attain ; 
but we arc well rewarded for the difficulty of the 
ascent by the enlarged horizon which expands bo- 
fore our view in proportion as we rise. 

But what arc the difficulties which just now 
impede your progress "^ 



Slioula not tlie rbe of price of agricultural pro- 
duce precede, instead of follow the cultivation of 
inferior soils ; for when an increasing population 
augments the demand for food, their wants would 
not prove a sufficient inducement to the farmer to 
turn up new land, if the price of corn did not rise 
to tempt him to do so. 


That is actually the case : but this rise of corn, 
the effect of a deficiency of supply, would be tem- 
porary, for corn would fall again as soon as the 
additional crops were brought to market, it the 
expense of producing these crops was not greater 
than that of corn raised on land previously culti- 
vated ; but if more labour has been bestowed upon 
them, if they cost the farmer more, they must 
continue to sell higher. This, then, is the cause of 
the permanent continuation of high price of raw 
produce after the demand has been supplied. It 
proceeds from no deficiency of supply, but from an 
increase in the cost of production. The new corn 
will, however, fall in price, if its cost of production 
does not greatly exceed that of land previously 
cultivated; but the price can never fall so low as it 
was before the deficiency of supply, if the land on 
which it is raised any respect inferior to that 
which was previously cultivated. 



Then do not wages as well as corn rise previously 
to the cultivation of inferior soils? 

MRS. B. 

Tlicy do ; but they rise not in consotjuence of the 
enhanced price of agricultui al })roiluce, but some 
considerable time previous to it. This rise is owing 
to accumulation of capital and increa>ed demand 
for labour, and it is followed by an augmentation 
of population, an increased demand for corn, and 
the rise of its price, to which we have just alluded. 


But since capital consists of food, i)f clothing, in 
a word, of all that can supply the wants of man, if 
it is increased before new land is brought into cul- 
tivation, it seems to supersede the necessity of tliat 
measure. Is it not rather inconsistent to say, that 
because the augmenting population is supplied by 
an increased capital, it requires a still further 'ad- 
dition to it? 

MRS. B. 

Capital does not consist solely of the necessaries 
t life, but includes also its conveniencics, its com- 
forts, and its luxuries ; capital may increase, there- 
fore, without an augment;Ulon of food. Mi-. 
Uicardo has so clearly explained this, in his recent 



treatise on Political Economy, that I will read you 
the passage : 

" When a high price of corn is the effect of an 
" increasing demand, it is always preceded by an 
*' increase of wages ; for demand cannot increase 
*' without an increase of means in the people to pay 
" for that which they desire. An accumulation of 
*' capital naturally produces an increased competi- 
*' tion among the employers of labour, and a 
*' consequent rise in its price." 


Yes, I recollect that was the case in our colony. 

MRS. B., reading. 
" The increased wages are not immediately ex- 

'' pended on food, but are first made to contribute 

" to the other enjoyments of the labourer. His 

*' improved condition, however, induces and en- 

*' ables him to marry, and then the demand for 

*♦ food for the support of his family naturally super- 

•' sedcs that of those other enjoyments on which 

•* his wages were temporarily expended. Corn 

♦' rises, then, because the demand for it increases, 

*• because there are those in the society who have 

" improved means of paying for it ; and the profits 

** of the farmer will be raised above the general 

" level of profits, till the requisite quantity ofcapi- 

*' tal has been employed on its production^ 


" Whether, after the supply lias taken place, 
" corn shall again fall to ils former price, or sliall 
" continue permanently higher, will depend on the 
*' quality of the land fronx which the increased 
*' quantity of corn has been supplied. If it be ob- 
" tained from land of the same fertility as that 
*' which was last in cultivation, and with no 
*' greater cost of labour, the price will fall to it* 
" former state ; if from jworcr land, it will con- 
" tinue permanently higher." 

Vou see, therefore, that your observation, that 
th€ rise of raw produce should precede the cultiva- 
tion of inferior soils, is perfectly just. But you 
must remember that the cause ot the original rise 
of price, and tliat which subsequently produces its 
permanent continuation, are perfectly distinct ,* the 
li'rst ceases, and the second commences as soon as 
the new crops are brought to market. Every time 
that inferior land is brought into culture, the price 
of raw produce, and consecjuently the profits of 
farming, must have previously risen. This occurs 
more or less at every progressive step made in 

agriculture. No new land can be cultivated till 
ipital has accumulated to maintain and employ u 

;rcater number of labourers. And no new laud 

ill be cultivated till jH>pulati()n has so far increased 

.lo to raise the price of corn, and make it answer 

to the ogricidturist to break pp new land for 


I, i! 



Since my Inst observation lias proved just, I will 
venture to make another. 'I'lie rise of wajres in 
consequence of accumulation of" capital shouiil be 
followed by a diminution of profits; this, there- 
fore, would also precede the cultivation of inferior 

MRS. u. 

And it does so. But the diminution of profits 
arising from abundance of capital and consequent 
increase of wages, is, like its cause, but temporary. 
It is soon followed by an increasing population and 
demand for food. The enhanced price of raw pro- 
duce then repays the farmer the expense of high 
wages, and his profits are for a time even higher 
than those of other employments of capital. 


Then will not also the landlord come upon him 
for rent, previously to the cidtivation of inferior 

soils y 


No, not any more than he would for having liad 
a remarkably productive crop, his extraordinary 
profits being only temporary. If, as we have al- 
ready obscrvi'd, the incrcjised demand for coi^n is 
supplied by land of i\s good quality as that pre- 
viously cultivated, corn will fall to its former price, 
just as cloth or linen would iirst rise in price by an 


increasing demand, and fall again when that de- 
mand was supplic<l. Hut if" the additional supply 
of cIdiIi or linen could not be proilucetl but at 
a greater expense than before, then those com- 
modities could not fall to their former price. An 
aildilional supply of corn is almost always pro<luccd 
under this disadvantage, being raisetl on land of in- 
ferior quality : corn therefore will remain perma- 
ncnlly higher priced ; anil it is not till then that the 
landlord comes ui)on the cultivator of the better soil 
for rent. 

Increase orca}>ital could never produce a perma- 
nent tiill of profits, tor as soon ;ts population 
increasetl to correspond with the capital, labour 
would tall, and profits be resioretl to their former 
rate. It is only when the cost of protluction of 
food is increase<l, that the rise of wages and dimi- 
nution of profits is permanent. 


iiut, Mrs. B., is there any cultivated laiul in this 
country which can afford no rent? I know that 
gentlemen frecjuently farm their own estates, but it 
is with a view either to amusement or atlvantatre, 
not because they coidd not obtain a rent for thtin. 

MKS. li. 

LLnglund is so far advanced in wraith ami popu- 
lation, ajid has brought such numerous gradation* 

L a 


of soil successively into culliv;itii)ii, that I do not 
suppose that there are now auy considerable tracts 
of land under tillage which can afford no rent ; but 
in countries that have niaile hvvs proj:»re»s, such as 
Poland, Russia, and America, we know this to bo 
the case; and in this country, jis there is yet land 
which is sufferod to lie waste, becairse at tht> present 
(wicc of corn it is not worth cultivating iiulcpend- 
ontly of rent, it is not natural to suppose that from 
such very poor land wc should suddenly rise to that 
of so good a quality that it will yield both rent and 
profit; there must undoubtedly be some of an in- 
termediate nature, which will afford the usual rate 
of profit to the cultivator, but will produce no rent. 
The inclosure of commons may afford us an ex- 
ample of land of this quality : they are, I believe, 
usualv irrantod in lots to the parishioners, free of 
cost, wiio cultivate it on their own account ; but I 
do not think they could obtain a rent for it, unless 
*hcy pnvii)u>ly laid out capital upon it in fencing, 
ditching, draining, manuring, &c., which are part 
of the necessary expenses of cultivation, and which, 
if the proprietor undergoes for the tenant, he na- 
turally requires to be repaid. For it must be un- 
derstood, that by the rent of land I do not mean 
the total rent of a farm, com|)rclu'n(liiig a dwelling- 
house, barns, stables, ami farming-stock of various 
descriptions, but simply the use of the re-pro- 
Jiutive power* of the land. 


C A no I. INK. 

Commons newly cultivated, in the course of time, 
will in their tuni, I supjwse, affonl a rent? 

MRS. B. 
No doubt they will, when an incrcaw; of popula- 
tion shall have forced soils of still inferior (juality 
into cultivation. But 1 conceive that a consider- 
able quantity of hmd, for which rent is actually 
jjaid, may be incapable of afl'urding it. A farm 
generally consists of a variety of soils; one field 
may yield double or quadruple the proiluce that an- 
other will. On farms of poor land there are pro- 
bably some fields that yield no rent at all ; that is 
to say, if taken separately, their })roduce would not 
more than repay the expenses of cultivation, and 
yield the usujd rate of profit, whilst oihtr fields 
may be of so superior a (jualily, as to atford a 
greater proportion of rent than is paid per acre for 
the farm ; an average is therefore taken, and the 
farmer pays more rent for the worbt, and less for 
the best, than they would afford. The total rent 
of the farm includes also the rent of the various 
buildings and improvements made on the premiscf. 


All this is perfectly clear; but I am not at all 
pleased to learn that as a country advances in the 
L 4 


Kccimiulation oi wealth, rent, the portion of the 
•idle landlord, augments, ^^\n\c pto/iiSj the portion 
of the itjdustrious farnicr, dhninishes. 

MRS. B. 

These idle landlords, of whom you complain^ 
neithei lower the profits of capital nor raise the 
price of agricultural produce. Both these eflects 
result from the diversity of soils successively brought 
into cultivation. Were rents, therefore, to be 
ftbolislicd, the only effect produced would be to 
enable farmers to live like gentlemen, as they would 
be enriched by that share of the produce of their 
farms which before fell to the lot of the landlord. 


And would not that be a very desirable change ? 
Is it not better that those who labour should grow 
rich, rather than those who live upon the fruits of 
the labour of others ? 

MRS. B. 

The yeomanry are a class of farmers who cul- 
tivate their own property ; and if you wish to en- 
courage their industry, you must allow them to 
reap the full reward of their labours, — to accu- 
iiuilatc wealth, ^nd, when wealthy, to indulge in 
ease and repose, and to let their land to others, if 
they prefer this plan to that of cultivating it them- 


selves. Were landed proprietors prohibited from 
letting their land when rich, they would nevertheless 
become idJc, and would neglect tlic farming busi- 
ness, which being left to the care of servants, the 
cultivation would sufler, anil the country, as well 
as the proprietor, be injured by the diminution of 
produce. In civilised countries, lantletl property 
has been obtained by industry, or by wealth, the 
fruits of industry, and should be secured in its full 
value, not only to the individual who has earned it, 
but to his heirs for ever. 

Besides, though it is true that rents rise as a 
country advances in prosperity, this rise is not in 
proportion to the increasing produce of the soil, 
owing to the additional capital laid upon it. Kent 
formerly used to bring in to the landlord one-third 
of tlie prcnluce of his land; it has since fallen to 
one-fourth, aiul has lately been estimated as low as 
ont^fifth; so that the laiullord, whilst he receives 
a higher rent, has a smaller share of the whole 


'riiut is some consolation. But could no means 
be devised to abolish rents, and compel farmers to 
reduce in consefjuence tlie price of their produce, 
so that neither tlie landlord nor the farmer, but Uie 
public, should enjoy the benefit of the surplus pro- 
duce, wbicii constitutes rent ? Surely this would 
L .5 


reduce the price of provisions, and ot all agricul- 
tural produce. 

MRS. B. 

Since the price of raw produce is regulated by 
the expense of producing it on the poorest soils 
under cultivation, which can aiforil no rent, how 
could it fall in consequence of the abolition of 
rents? But supposing that it did so, what advan- 
tages would you expect to result from the reduc- 
of prices so produced? 


If food were cheaper, people would be able to 
consume more, and the poor would iiave plenty. 

MRS. B. 

How so? would the land be more productive in 
consccjuence of the abolition of rent ? and if mon? 
.shouUl not be produced, how could the people con- 
aume more? An increased consumption without an 
increasetl supply will, ns we have remarked on a 
former occasion, lead to a famine. The price of 
a quartern loaf is now one shilling; I conclude, 
therefore, that at that price the consumption 
of bread will be so proportioned to the quantity 
wanted, that the stock of wheat will last till the 
next harvest. The adoption of your compulsory 
jucasures might reduce the price of a quartern 
loaf lo ninc-j^cncc, and every poor family being 


thin ennblcd to increase their consumplion ol 
bread, tlie i.lock of wheat would not lost out till 
the en>uing harvtst. Then the following year, 
inbteuil of raising more corn to make up the dv- 
liciency, the poorest land, which yields no rent, 
and but just ufibrds the profits of capiuU at tlie 
present price of raw produce, would, by such a 
diminution of price, be thrown out of cultivation ; 
and the produce of the country would thus be con- 
siderably diminished. 


Very true. I did not foresee that consequence. 
And a scarcity woulil perhaps raise the price of 
bread higher than it was before .'' 

MR8. B. 
How uiiich would it be necessary for bread to 
rise in price in order to make the corn last till the 
next crops came in ? 


To the price at which it now sells, one shilling. 

MKS. n. 

We return then to the rent-price, though no rent 

is paid : y«»i» we, therefore, the fallacy of your 

|)roposctl measures. The high price, of which you 

^o bitterly complain, is the price necessary to pro- 

L t; 


portion the consumption to the supply, so as to 
make it last till the ensuing harvest. 


S<) far Irouj being nioriificd, Mrs. B., I am 
delighted with my disappointment, as it has been 
the means of convincing me that it" the poor are 
obliged to pay a high price for the necessaries of 
iile^ it Is for their own benefit, as well as that of 
the mighty lords of the land ; since it ensures them 
a uniform sujiply throughout the year. 

iMRS. B. 

The labouring classes are besides in a great 
measure relieved from the burthen of high prices, 
as their \vagc< rise in proportion ; but observe, 
that this is the case only when high prices are occa- 
sioned by increased cost of production, not by 
scarcity. "A high price" (Mr. Ricardo observes), 
" is by no means incompatible with an abundant 
" supply ; the price is permanently high, not be- 
" cause the (juantity is deficient, but because there 
" has been an increased cost in producing it," 


1 the more willingly acquit rent of the accu- 
sation of creating high prices, since I see that 
iljere are two other sources from whence that evil 


may How, the tlivcrsity of soi), and the necessity 
of proportioning the consumption to the supply. 

.Mils. B. 

Since yon acknowletljrf that \ng\i prices arc ne- 
cessary to prevent scarcity, you should, I ihiniv, 
uo longer consider them as an evil. 

An enquiry into the cflTect-s of human laws and 
institutions often discovers error ; but whatever 
flows in the course of nature springs from a pure 
source, and the more accurately we examine it, 
the more admiration we feel tor its Author. 

Thus though rent cannot in itself be considered 
as an evil, sinee we have iracetl its cause to the 
natural tiiM'tility of the earth, and the diversity of 
soil ; and have ascertained its effect to be to re<i;u- 
late the consum{)tion of food to the suj)ply ; yet 
every artificial measure which tends to raise the 
price of ngricidtural produce, so as to enable the 
farmer to pay a higher rent, is certainly injurious. 
Therefore restrictions on the free importation of 
com, or any other sj>ccies of raw produce, which 
raises the price of those articles at home, is takuig 
an adilitional sum out of llu" pockets of the con- 
'«umer to })ut into that of the landlord. For rent 
may be considered as a necessary tax which 
the consumer pays to the landlord; the fariiicr is 
merely the vthiclc of conveyance from the one to 
the lather. 


And has such u measure immediately ihe cfiecl 
of raising rents ? 

MRS. B. 

Not until the leases are expired; during their 
existence the farmer enjoys all the adventitious 
gains or suffers all the looses that may occur ; but 
when his lease is renewed, it nmst corrcspoi»d with 
the rate of profit, and rise or fall in proportion to 
the gnins which the farmer expects to make, so as 
to give the whole of the surplus produce to the 
landlord, and leave oidy the usual profits of capital 
to the farmer. It may happen, indeed, either from 
ignorance or carelessness, and sonieiimcs from 
motives of lumianity, that the landlord docs not 
exact all that the farmer can afford to pay ; but 
these are accidental circumstances, and the whole 
of the surplus jiroduce is consideretl as the fair and 
usual vent. 

This theory of the origin and progress of rent, 
which 1 hope I have now explaine*! to your satis- 
faction, was first developed by Mr. Malthus, and 
its consefjuences have since been more fully traced, 
and some important inferences deduced from it, in 
a late publication by Mr. Ricardo, some passages 
of which 1 have reatl to you. 


I hope I have miderstootl all you have said on 



the subject, hut I beg that you will allow me to rc- 
capitulatJ" th-' principal luads, in order to see if I 
am not misiakeii. In proportion as capital accu- 
mulates, Uie demand for latx)ur increasi>s. which 
raises wages, improves the condition of the poor, 
and enables them to rear a greater number of 
children — this increases the demand for subsist- 
ence, raises the price of corn, and induces the 
farmer to take more land into cultivation — if the 
new land be of inferior quality, the crops are pro- 
duced at an increasetl expense, which raises the 
price of raw j)ruduce gcin rally, anti creates rent 
on superior soils. Corn, now become permanently 
dearer, causes a permanent rise of wages, and a 
t(»rresponding fall of profits. 

MRS. B. 
Your recapitulation is very correct, and I am 
glad to find you have understood n)e so well, for 
tlie subject of rent having been but lecently in- 
vestigated with accuracy, it is neither so thoroughly 
developed, nor so well understood, as uuM other 
parts of jX)litical economy. 
















FnoM the subject of our last conversation 1 have 
learnt that agriculture yields two distinct incomes; 
one to the proprietor, the other to the cultivator of 
the land. 

.MRS. H. 

And it employs also two capitals to produce 
those incomes; the one to purchase, the other to 
cultivate the land. A man who lays out money in 
the purchase of land becomes a landed proprietor, 
and obtains a revenue in the form of rent. He 
who lays out capital in the cultivation of land, 
becomes a farmer, and obtains a revenue in the 
torm oi' produce. 


i thought that the land was the capital from 
vhich the farmer derivctl his profits. 

MRS. B. 

\'ou mistake ; the land is the capital of its pro- 
prietor, and as such yields him a revenue ; what- 
ever the farmer obtains Iroin it, is derived from 
cultivation; that is to say, from the labour and ex- 
pense he bestows on the soil. The cultivation ol 
land is to the farmer what the operation of machi- 
nery is to the manufacturer. A farmer requires 
capital to pay his labourers, and to purchase his 
furming-ivtoek, such as cattle, waggons, ploughs, 
^c. It is the bare land and the farming buildings 
which he rents. The crops which are upon the 
Ljround when the agreement is made arc paid for 
inilependently, and become the property of the 


farmer. Unless tlicrcfove lie has a capital to defray 
these expenses, he cannot take the lease of a farru. 


I always supposed that the produce of a farm 
was suflicient to defray its expenses ; nor can I 
understand how profits are to be derived from a 
farm, if tlie cultivation and rent cost more than 
its produce will repay. 

MRS. B. 
It is not so. Tlie capital of the farmer is em- 
ployed as the means of cultivating his farm ; and 
when at the end of the year, after paying his rent, 
his labourers, and keeping his stock in repair, he 
finds himself in possession not only of his original 
capital, but also of a surplus or profit, it is a proof 
that the farm produces more than the cost of its 
rent and cultivation. The case is similar in all 
employment of capital. The manufacturer who 
lays it out in the purchase of raw materials, nnd hi 
paying the labour which is afterwards expended on 
them ; or the merchant whose capital is employed 
in the purchase of goods for sale, could not carry 
on their respective occupations without first laying 
out their capital : but it is returned to them, toge- 
ther with the profits that have accrued by its em- 
ployment. Each of these occupations bring in 


more tliuii is laid out, but none of tlicm could be 
carried on without a cnpital. 


Oh yes ; I recollect the labourer produces tor his 
employer more than he receives from him as 
wages, and this surplus is the source of his master's 
profit ; but if the farmer had not wherewithal to 
)niy lii-> labourers' wages, he could not set them to 


It is then upon the ca|)ilal which a farmer em- 
ploys on his land, that he calculates his profits? 

MRS. B. 

Yes. Let us suppose that a farmer employs a 
ipital of the value of 3000/. on his farm : he may, 
ossibly, after deducing the rent and the exj)enses 
I cultivation, make ten per cent, or 300/. j.rofit. 


That is to say, that at tlic end of the year he 
uould find himself 300/. richer than he was before? 

MRS. B. 
Provided that he had spent none of his gains 
(luring the course of the year. But as his family 
.lie commonly maintained by the j)roduce of the- 
rm, he will at the end of the year be actually 
i.cI:l'. or poorer according to the proportion which 


\u< domestic expenses liavi^borne to his gains. But 
these cannot be considered as a deduction from liis 
profits, as the expense of the maintenance of his 
family nmst fall upon liis revenue in whatever way 
it is obtained. 


And what is the usual rent paid for such a 
farm ? 

MRS. B. 

It depends in a great measure upon the extent 
and condition of the land. A considerable farm, 
in a good state of cultivation, and possessing the 
advantage of a fertile soil, may not require a capital 
of more than ;K)00/. to carry it on ; whilst a farm 
of only half that extent, if in a bad condition, and 
with an ungrateful soil, may require as large a 
capital to be laid out on it. But a very different rent 
would be paid for these two farms. 


The large productive farm will naturally pay a 
higher rent than the smaller ill-conditionetl one ? 

MRS. n. 
And the difference of rent will equalise the profits 
which a farmer would derive from emj^loying the 
same (juantity of capital on each of these farms. 
Taking an average of the state of culture, a farm 
which requires 4000/. capital may pay a rent ct 

Ul.VLNUi: KIU)>! <.:l I.Ti\ ATION or I.AM). -.$7 

about J()()/., tlie .slmrc ot ilic I'aiiucr being nearly 
double that ofthe lancUonl. 

Vou said in our last conversation, that tlie rent 
of land had lately been estimated as low as 'tli 
of the produce. A farm, such as you have de- 
scribed, would therefore yield produce worth 
KKX)/., in which case the profits of the farmer 
would be above three times as great as those ofthe 
lamllord ? 

MRS. B. 

You forget that from the total or gross produce 
must be deducted not only the rent, but also the 
expenses of cultivation : these are generally esti- 
mated at one half of the produce, after deducting 
the rent; there will remain therefore -100/., which 
is 10 per cent, profit on the lOOO/. capital em- 
ployed on the farm. If from this sum the farmer 
saves 50/., he may lay it out in the improvement 
of his land, which wi|l render the produce more 
plentiful the following year; an advantiigc of which 
he will (It rive the full benefit, as his rent will remain 
the siinie to the end ot the lease. 


Hut on granting a new lease, the proprietor, 1 
stipposc, would expect a higher rent for a farm that 
had been thut; improved ? 

MRS. U. 

No doubt; it is therefore desirable that land 
should Dot be let on short leases, because farmers 
would have no inducement to improve the condi- 
tion of their land without the prospect of reaping 
the benefit of it for some years to come. 


But towards the end of the lease, this objection 
would remain in force ? 

MRS. B. 

True: but to prevent this, farmers generally ob- 
tain a renewal of their leases some time before 
they are elapsed. Besides it would be contrary to 
the interest of the landlord to deal hardly with 
his tenants on such occasions, as it would dis- 
courage them from improving their farms; an ad- 
vantage in which the landlord must eventually 

In Staffordshire, Nottinghamshire, and some 
other parts of the country, it is not customary to 
grant leases; the tenants hold their farms at the 
will of the landlord. There is, however, a sort of 
conventional agreement between the parties, that 
except in cases of misconduct, the farmer shall not 
be removed, nor have his rent raised during a cer- 
tain period. Some people are of opinion that this 
mode of letting land is preferable to granting a 


lease; because tliey say the industry of the farmer 
is stimulated both by hope and feur ; the hope of 
profit from his labours, and the fear of being 
turned out should he neglect the improvement of 
his farm : but in arguing thus they do not consider 
that this fear must operate in two ways; for in 
proportion to the improvement which the farmer 
make^, so is the temptation to the landlord, if he 
be needy or illiberal, to turn him out, or to exact 
an increase of rent. In short, there can be no 
greater check to industry than the insecurity of the 
profits its produces; and how can a farmer feel his 
interests secure whilst he is dependant on the will 
of his landlord ? 


Besides, though a farmer may repose great con- 
fidence in the character of the individual whose 
land he holds, the uncertainty of life renders him 
dependent also upon his heir, and this may perhaps 
be some wild extravagant youth, who, witliout re- 
gard to his ultimate interest, will exact the highest 
rents from his tenants. 

MRS. B. 
Security is, no doubt, the most important point 
>b» the encouragement of industry ; and the greatest, 
indt^ the only encouragement which government 
can give to agriculture, is to secure to the farmer 
alt the power over the soil that is nccc55ory for its 


perfect cultivation, and to ensure to him the profits 
of every improvement he may make. I will reail 
you a passage from Paley on this subject: 

" The principal expedient by which laws can 
" promote the encouragement of agriculture, is to 
*' adjust the laws of property as nearly as possible 
" by the following rules: 1st, To give to the oc- 
" cupier all the power over the soil which is neces- 
" sary for its perfect cultivation. 2dly, To assign 
** the whole profit of every improvement to the 
" persons by whom it is carried on. Now it is in- 
" different to the public in whose hand this power 
*' of the land resides, if it be rightly used ; it mat- 
'< ters not to whom the land belongs if it be well 
" cultivated. 

" Agriculture is discouraged by every constitu- 
" tion of landed })roperty which lets in those who 
" have no concern in the improvement to a parti- 
" cipation of the profit. This objection is appli- 
" cable to all such customs oi" manors as subjects 
" the proprietor, upon the death of the lord or 
" tenant, or the alienation of the estate, to a fine 
*' apportioned to the improved value of the land. 
" But of all institutions which are in this way ad- 
" verse to cultivation and improvement, none is so 
" noxious as that of tithes. When years perhaps 
" of care and toil have matured an improvement, 
" when the husbandman sees his new crops ripen- 
" ing to his industry, the moment he is ready to 



" put his sickle to the grain, he finds himself com- 
*' polled to divide his harvest with a stranger. 
'• Tithes are a tax not only upon industry, which 
*' feeds mankind, but upon that species of exertion 
** which it is the aim of all wise laws to cherish 
** and promote." 


It is indeed much to be regretted that a pro- 
vision for the clergy should not bo raised in some 
other manner. 

MRS. B. 

Since all right of property is derived from legal 
institution?, the clergy have an equal right to their 
tithes as the landed proprietors to their estates; 
yet so severely does this law fall upon the culti- 
vators of land, that I believe few of the clergy ven- 
ture to levy tithes to the extent of their rights; 
they cannot do it without incurring the ill will and 
opposition of their parishioners. Haw defective, 
then, must that institution be, which dispossesses 
one man of the fruits of his industry, whilst it will 
not allow another to take, without exciting vex- 
ation and disturbance, that which the law has 
assignetl to him as his property. 

lliis opposition of interests is prejudicial both to 
religion and morals, by creating an endless source 
of contention between the clergy and tluir parish- 
ioners; and the vexation which the farmer cannot 



fail to experience on seeing part of the fruits of lus 
labours gathered by another, acts as a constant 
check upon his industry. 


Tithes appear to me very analogous to rent ; 
may they not be considered, like rent, as a portion 
of the surplus produce of the land ? 

MRS. B. 

No; because, whether a farm yields a surplus 
produce for rent or not, it is equally obliged to pay 
tithes. The farmer, therefore, in order to pay 
tithes, is compelled to sell his crops at an advanced 
price, and it is eventually the consumer who pays 
the tithes; whilst, if they were a portion of the 
surplus produce of the farm, the whole burden 
of them would fill on the landlord. 


But, supposing that the consumer refused to pay 
the advanced price requisite to relieve the farmer 
from the burden of tithes, the landlord would be 
obliged to lower the rent for tliat purpose? 

MRS. B. 

Who, then, would pay the tithes on lands which 
afford no rent? They must fall on the cultivator; 
and as he cannot afford to pay the/n without en- 


hancing the price of his crops for that purpose, he 
would no longer find it answer to cultivate soil of 
!>o poor a quality ; he would throw up his farm, in 
consequence of which tlie supply of corn would be 
diminished, its price would rise, and the farmer 
would again find it expedient to resume the culti- 
vation of his land ; it is thus that the consumer is 
compelled to pay tithes, or any other arbitrary tax 
laid on the land. 


That is certainly true with respect to land which 
pays no rent ; but I cannot understand why tithes 
should not be deilucted from the surplus produce, 
where the soil is of a nature to afford it ? 

MRS. B. 

The price of raw produce, you must recollect, is 
regulated by the expense of producing it on soils 
of the worst quality under cultivation; tithes must 
increase that expense, and enhance generally the 
price of raw produce. The farmer being thus 
repaid by the consumers, the iiame surj^lus produce 
will remain to the landlord as previous to ihc 
introduction of tithes. 


But if it ih not the faimcr who p.nys ihc tithes, 
M 2 


why is he willing to give a higher rent lor land 
tithe free? 

MBS. B. 

Because he has the advantage of selling liis crops 
at the advanced price vvhicli tithes occasion, 
whether his land is tithe free or not : if he is 
exempted from this tax, therefore, it will increase 
the surplus produce which remains for the land- 
lord after the expenses of cultivation are deducted. 


Farmers, 1 suppose, are not aware, that the price 
of their crops is raised in consequence of tlie tithes, 
otherwise this tax Avould not produce so much dis- 
content among them ? 


Probably not. Tithes, therefore, do not consti- 
tute a portion of the surplus produce of the soil, 
they must be considered as part of the expenses 
of cultivation; they add to the cost of production 
of the crops, and consecjucntly raise the price of 
all raw produce. This, you know, is not the case 
with rent, which is the surplus produce of the land, 
after deducting the expenses of cultivation. 


Since it is so desirable for the cultivator to 
have unlimited power over the soil, I should hare 
thought that it would have been particularly ad- 


vaiuageous for landed proprietors to cultivate their 
own estates, instead of letting them to fanners ; 
and vet it is a common observation tiiat gentle- 
men make the least profits by agriculture. Tiiis 
is the more unaccountable, because, being botli 
landlord and farmer, the proprietor must receive 
the two incomes comprised in the produce of the 
land, rent and profit. 

MRS. B. 

But recollect that he also employs two capitals, 
in order to make the two incomes; the one to 
purchase the land, the other to cultivate it. The 
reason why gentlemen who cultivate their own 
estates do not usually make profits equal to those 
of a common farmer, is either because they do not 
understand the business so well, or that they do 
not bestow the same care and attention upon it. 
The common farmer usually devotes the whole of 
his time to his farm, either in the ca})acity of bai- 
liff, or that of labourer ; while the gentleman 
farmer never earns the wages of labour, and gene- 
rally leaves the important oflicc of bailiff to be 
performetl by a substitute; therefore were the gen- 
tleman to raise as plentiful crops ns the farmer, 
they would be produced at a more considerable 
expense, and his gains would be proportionally 
diminished. As to the value of the rent, it must 


1)0 reckoned independently, as lie receives it in his 
quality of landlord. 


It would then probably increase the agricultural 
produce of the country, if gentlemen were always 
to let their land instead of farming it themselves. 

MRS. B. 

On the contrary, I believe it to be very desirable 
that some few gentlemen, in different parts of the 
country, should cultivate their own estates. Being 
generally men of greater information than common 
farmers, they are more willing to make experi- 
ments, and adopt any new mode in the various 
agricultural processes which may appear eligible. 
Besides, the land is frequently better improved in 
the hands of the proprietor than in those of a 
labouring farmer ; as the proprietor has usually the 
advantage of a larger capital to lay out on his land, 
and then he is not restrained by the apprehension 
that his rent will be ultimately raised in propor- 
tion to the additional value which he gives to the 

Townsend, in his Travels in Spain, has made 
some very judicious observations on English gen- 
tlemen farmers. 

" By residing," he says, " on their own estates, 
" they not only spend money among their tenants. 


'' which by its circulation sets every thing in ino- 
'' tion, and becomes productive of new wealth, but 
" their amusement is to make improvements. By 
" planting, draining, and breaking up lands which 
" would Imve remained unprofitable, they try new 
'* experiments, which their tenants could not af- 
*" ford, and which, if successful, are soon adopted 
" by their neighbours. They introduce the best 
'• breed of cattle, the best implements of hus- 
'• bandry, and the best mode of agriculture; they 
" excite emulation, they promote the mending of 
"■ the roads, and secure good police in the villages 
'• around tliem. Being present, they prevent their 
" tenants from being plundered by their stewards. 
" TJiey encourage those who are sober, diligent, 
*' and skilful ; and they get rid of those wli© would 
" impoverish their estates. Their farmers, too, 
" finding a ready market for the produce of the 
" soil, become rich, increase their itock, and by 
" their growing wealth make the land more pro- 
" ductive than it was before." 


Vou have cnumeratetl so many advantages o)i 
the opposite side of the question, that I begin to 
think that it would br move beneficial to the coun> 
try that all landetl proprietors should cultivate their 
own estates; for though they might not be great 
gainers by it themselves, yet the country would 

M \ 


derive all the advantage from tlie improvement of 
the soil, aiid the introduction of scientific agri- 

MRS. B. 

A few gentlemen farmers in each county will be 
sutlicitiit for the latter purpose. Were it common 
for proprietors to farui their own estates;, I am con- 
vinced that it would be extremely injurious to 
agricultural produce ; for no command of capital, 
no scientific knowledge, can, in a general point of 
view, compensate for the keen and vigilant eye of 
the industrious farmer, who sees that every thing 
is turned to the best account. 


I shdftid suggest as a medium between these two 
modes, that a landed proprietor should neither 
farm his estate, nor let it, but employ an agent to 
cultivate it for him, whose salary should be pro- 
portioned to the produce which he raises on the 

MRS. B. 

Such I believe was the species of tenure by which 
farms were held by the vassals of the nobles when 
they were fii st emancipated from slavery, and that 
military services were no longer, as in feudal times, 
considered as a sufficient remuneration for the 
occupancy of land. To give the cultivator any in- 
terest in the pro<luce he raises, acts certainly as a 


spur to his Industry; but it is one mucli less power- 
ful than the security and independence of tlie leuse- 
ijold-fariner, who after paying a stipulated rent 
enjoys the whole advantage of the efl'orts of his 

Town«>i'nd informs us, that most of the great 
estates in Spain are held in administration, that is, 
cidtivated by agents or stewards for the account of 
the proprietor; and it is principally to this cause 
that he attributes the low state of agriciliture. 
" No country," he observes, " can suffer more than 
'* Spain for want of n rich tenantry, and perhaps 
*' none in this respect can rival England. We find 
** universally that wealth produces wealth, but then 
" to prcnhice it from the earth, a due proportion 
'• of it inu>t be in the pocket of the farmer. Many 
•* gentlemen among us, either for amusement, or 
*' with a view to gain, have given attention to agri- 
*' culture, and have (iccii[)ie(l much land ; they 
•' have produced hixuinmt crops, and have intro 
" duced good husl>an(hy ; hut I apprehcnil few can 
"• lx)a^t of having made much profit ; and most are 
•' ready to confess that they have sutFereti some 
" loss. If, then, residing on tlu-ir own estates, 
" with all their attention, they are losers, how 
" great would be the loss if in distant provinces 
" they eniployed only stewards to plough, to sow, 
•' to sell, and to eat up the produce of their lands.'* 
M 5 


There are, however, in warmer cHmates, some 
species of produce, which from their pecuhar nature 
farmers would not venture to undertake to cultivate 
on their own account, and proprietors would be 
unwilling to trust entirely to their management. 
Such is the culture of the vine and the olive, plants 
which require the utmost care and attention durijig 
a number of years before they begin to yield any 
fruit, and farmers are seldom sufficiently opulent 
to engage in a species of husbantlry, the profits of 
which arc so long protracted. On the other hand, 
as these plants may be very materially injured by 
being allowed to bear fruit either prematurely or too 
luxuriantly ; and as the interest of the farmer looks 
rather to immediate than remote profits, it is not 
considered safe to trust such plantations entirely to 
his care. Vineyards and olive-grounds are there- 
fore, I am informed, cultivated by the I'armer in 
half account with the proprietor, who shares with 
him equally the expenses and the profits. This is 
called the Mclaijcr system of cultivation : it was 
formerly very common on the continent for all 
kinds of produce, and still prevails in Italy, where 
the land is so extremely subdivided, that the me- 
tayer farmers, frequently subsisting upon half the 
produce of not more than three or four acres of 
land, are scarcely superior in condition to our pea- 
santry. In France and Switzerland this system of 
fiurming is confined almost exclusively to the culture 

. J 


of ilic vine arul the olive. But how requisite so- 
ever the system may be for parliculur plantations, 
the usual mode in this country ot granting lenses, I 
eonceive to be, not only most advantageous to the 
farmer, but uhimately so to the landed proprietor, 
who can procure the highest rent tor llic land best 
cultivated; and it is also most beneficial to the 
ountry by yielding the greatest jiroduce. But in 
^pain this mode could not be atloptod tor want ot 
II affluent tenantry. The wealth of the country is 
hicfly engrossed by the nobles and clergy; there 
i> a total deficiency of yeomen, or farmers who cul- 
tivate their own land ; and the middling classes are 
few in number, and so destitute of capital, that they 
re incapable of taking a lease of land. 


I often wish that the property of land was more 
"•ubtlivided in this country. How delightful it would 
t)e to see every cottage surrounded by a few acres 
belonging to the cottager, which would enable him 
to keep a cow, a few pigs, and partly at least to 
support his family on the produce of his little form. 
Do you recollect Goldsmith's lines? 

" A time there was, e'er Ent^land's griefs began, 
" When every rood of ground maintain'd its man : 

" But now, nlas ! 

" Along the lawn where scattcr'd hamlets rose, 
" Unwieldy wiallh and cumb'rous pomp repose, 
*' And every want to luxury allied." 

MRS. B. 

I shall point out to you a passage in Arthur 
Young's Travels in France, in which this question 
appears to be ably discussed. 

CAROLINE reads. 
<' I saw nothing respectable in small properties, 
" except most unremitting industry. Indeed it is 
" necessary to impress on the reader's mind that 
" though the husbandry I met with in a great 
" variety of instances was as bad as can well be 
" conceived, yet the industry of the possessors was 
" so conspicuous and meritorious that no com- 
" mendations would be too great for it. It was 
" sufficient to prove that property in land is the 
" most active instigator to severe and incessant 
" labour. And this truth is of such force and ex- 
" tent that I know no way so sure of carrying tillage 
" to a mountain-top as by permitting the adjoining 
" villagers to acquire it in property ; in fact we 
" see that in the mountains of Languedoc they 
" have conveyed earth in baskets on their backs to 
" form a soil where nature has denied it." 

MRS. B. 

Land that is too poor to afford a rent, you will 
recollect, may still yield sufficiently to pay the 
proprietor for its cultivation ; it is therefore the 


property of such soils alone which will ensure their 
being cultivated. — But go on. 

CAROLINE reads. 
" But great inconveniency arises in small pro- 
" perties from the universal division which takes 
" place after the death of the proprietor. Thus I 
" have seen some farms which originally consisted 
" of 10 or 50 acres reduced to half an acre, with a 
** family as much attached to it as if it were an 
" hundred acres- The population flowing from 
*' this extreme division is often but the multiplica- 
" tion of wretchedness. Men increase beyond the 
" demand of towns and manufactures, and the 
" consequence is distress and numbers dying of 
" diseases arising from insufficient nourishment. 
" Hence small properties much divided form the 
" greatest source of misery that can be conceived. 
" In England small properties are exceedingly 
" rare ; our labouring poor are justly emulous of 
" being the proprietors of their cottagta, and that 
•' scrap of land which forms the garden; but they 
" seldom think of buying land enough to employ 
" themselves. A man that has two or three 
*' hundred pounds with us, docs not buy a field but 
" stocks a farm. In every part of England in 
" which I have been, there is no comjiarison be- 
" tween the case of a day-labourer and of a very 
*' little farmer : we liavc no people that fare so 


" hard and work so ill as the latter. No labour i^ 
♦' so wretchedly i)Lrfunnc(l ami so dear as that ol' 
" hired hands accustomed to work for themselves ; 
" there is a disgust and listlessness that cannot 
" escape an intelligent observer, and nothing but 
" real distress will drive such little proprietors to 
" work at all for others. Can any thing be appa- 
" rently so absurtl as n strong, hearty man walking 
" some miles and losing a day's work in order to 
" sell a dozen of eggs or a chicken, the value of 
" which would not be equal to the labour of con- 
" veying it, were the people usefully employed?" 


This reminds me of a poor woman in Savoy, 
who kept a few cows among the mountains two or 
three leagues distant from Geneva. Having no 
other market for her milk, she carried it regularly 
every day to that town for sale; thus the greater 
part of her time was spent upon the road, whilst it 
might certainly have been much more profitably 
employed had she been dairy-maid to some con- 
siderable fanner, who, having milk enough to turn 
it to butter and cheese, could in that state send it 
■wholesale to market. 

MR8. D. 

The inconvenience you allude to has of late years 
been obviated in many of the villages of Switzer- 

KLVKM L riiO.M t I L I I \ A I I C».N Ol LAND. .'J.» 

laiul, especially in the neiglibourliood of Geneva, 
by llu' inlroiluction of a peculiar species of public 
tlairy cs>tabli>limeiU.s which, 1 uiulersiaiicl, origi- 
nated in the plains of Lonibardy. To these dairies, 
calletl Fruit icri'Sy the larmers in the vicinity bring 
their daily stock of milk, which is converted into 
butter and chee^', and returned to them in that 
form, the establishment retaining only such a })or- 
tion a& k nece>s;iry to ilefray its expenses. 

There arc also considerable dairy estaUlishment(> 
in the iswiss mountains, but these are commi>nly 
private property ; the proprietor of llu.- mountain- 
pasture usually hiring cows of tlie neighbouring 
farmers, who are commonly repaid in the manu- 
tactured produce ot the dairy. 

Small landed properties are extremely common in 
Switzerland. The canton De \'aud consists chiefly 
of such, and they do not seem to be attended with 
the mischievous consequences which Arthur Young 
describes; for the country is well ciiltivaied, antl 
landed property is not reduced to that minute divi- 
sicn which entails wretcheilness. 


1 heard a genlleniiin who is recently returned 
from France say, that three servants, whom he hat! 
hire<l at Marseilles, had all been men of landed 
property ; but that the portion of inlu riiance to 
each had been so sraiUl that they iiad di^^jx^scd of 


it to Other members of their families, in order to 
hire themselves as servants, 

MRS. B. 

When this or any other cause prevents the ex- 
treme partition of landed property, tlie principal 
objections to small properties are removed ; and 
the disadvantage arising from deficiency of capital 
may be in a great measure compensated by the 
stimulus given to the industry of a man who cul- 
tivates his own land. This system is perhaps best 
calculated for mountainous countries, where the 
strongest motives to industry are required, to in- 
iluce men to climb the steep rock in order to culti- 
vate a small patch of earth favourably situated on 
its acclivity. 


I have heard that the condition of the lower 
agricultural classes in France has been very much 
improved by the sale of the national domains, at 
the commencement of the Revolution in that coun- 
try ; that it has enabled the small farmers and many 
of the peasantry to become landed proprietors, and 
thus to cultivate their own land ; and that this sub- 
division of property has proved so beneficial that, 
notwithstanding all the evils they have since had 
to contend with, they are yet in a very thriving 
condition. This does not seem to agree Avitk 
Arthur Young's statements 1 

MRS. B. 

By tlie sale ot the national domains, very small 
proprietors, whose land was scarcely equal to the 
maintenance of their families, were enabled to en- 
large their farms. The ill consequences arising 
from an extreme subdivision of land would thus be 
remedied. But we must recollect that at the com- 
mencement of the French Revolution, the restrictive 
and oppressive laws which checked the progress of 
every branch of industry were abolished; this gave 
vigour to agricultural pursuits. Then the sale of 
confiscated lands, at a period when its tenure was 
considered as extremely insecure, rendered them so 
cheap, that it was almost as easy to purchase an 
estate in France as in America, with the additional 
axlvantagc of its being already in a state of culti- 
vation. These circumstances all concurred to im- 
prove the condiiJon of the small landed proprietors. 
With a view of amassing little capitals to lay out 
upon their new domains, they have acquired habits 
of industry and economy, and such habits are of 
tliemselvcs a treasure to a country. These small 
capitals which are now growing up in France, will 
no doubt prove a source of prosperity; but as the 
French law divides the landed property of a man 
dying without a will among all his children ecjually, 
it may probably in time lead to that extreme division 
of landetl prt)pcrty which is attendetl with such iu- 
jurious effects. 


And are there the same objections to small lease- 
hokl farms as to small landed properties ? 

MRS. B. 

In a great measure. It is poverty alone which 
induces a man to take a very small farm ; and a 
poor farmer cannot make those exertions which arc 
requisite for good husbandry. The profits of a 
considerable farmer enable him to improve his land, 
chose of a small one are entirely consumed in the 
maintenance of his family; liis land is therefore 
badly cultivated, and he has little or no surplus 
produce to send to market. 

I met with a remarkable instance of the disad- 
vantage of extremely small farms during a visit to 
a considerable landed proprietor in Hampshire. 
He made me observe a fieltl in which a number of 
labourers were employed ploughing and sowing tur- 
nips, and pointed out a man whose appearance was 
far less creditable than that of the other labourers. 
* That man,' said he, * rents this single field, and 
resides in tlie wretched cottage you sei at the end of 
it: the common labourers are better fed and clothed 
than himself, because he cannot earn so good a 
livelihood by his farm as they can by their daily 
work. Unable to allbrd the expense of hiring a 
team of horses to plough his field, and not knowing 
where to procure sheep to eat off the turnips which 


should be the crop next in rotation, his intention 
was to have let the field lie fallow; when I proposed 
to him to undertake to plougii and sow it, on con- 
dition that my sheep shonld eat off the turnips on 
the ground, by which means they would manure it, 
and his field would be returned to him in a much 
better state than if suffered to be fallow. To this 
proposal he assented, and thus we shall both be 


And the country will profit by both their gain;?, 
for the sheep will be fattened by turnips, which, 
without such an agreement, would not have been 
grown ; and the farmer's ensuing crop will be more 
jwocluctive from the land having been manured by 
the sheep. 

But what sized farms do you suppose to be most 
beneficial to a country ? 

MUS. B. 

That nnist var}' extremely, according to the local 
situation, the nature of the climate and soil, and 
the capital of the farmer. In 15elgium, which is 
esteemed one of the best cultivated countries in Eu- 
rope, I am informed that the farms are upon an 
average about 40 acres ; and in Tuscany, another 
spot remarkable for the excellence of its agriculture, 
the farms seldom exceed 10 or ]5 acre?, all cnlti- 
vf^ted upon the metayer system ; but in this favour- 


cd climate the fields yield such abundant crops that 
the produce approaches more nearly to that ot" a 
Belgic larm than you would imagine from tlie dit- 
ference of their extent. 

In this country there is, I think, a strong predi- 
lection in favour of considerable farms. Were I to 
give an opinion, I should say that a farm should 
never be so large that the farmer cannot superintend 
the whole of the cultivation himself; nor so small 
as not to enable him to keep up that farming stock 
establishment necessary for the most perfect hus- 
bandry. But this is a point which may be safely 
left to regulate itself. I do not apprehend that this 
country can suflfer by the different size of farms; 
for there are very few small landed properties ; and 
as it is the interest of the landlord to draw the 
greatest possible inconje from his estate, he will let 
his farms of such dimensions as he conceives his 
tenant will be able to turn to the best account. 
To a very opulent farmer he may be induced to 
grant a lease of a large farm ; whilst he will refuse 
that of a single field to a cottager who would ex- 
haust instead of improving the soil. 

The advantages of considerable farms have been 
so ably delineated in one of the last numbers of 
the Edinburgh Review, that I shall read you the 
passage : 

<' It is quite evident that some of the most valu- 
^' able mechanical inventions could never hav.; 


" come into general use it there had been no farms 
" of more than 100 or 150 acres; that no great 
*' improvement could have been made in our live 
" stock ; that there would have been still less room 
" than there is at present for the division of labour, 
'• and for its accumulation for the purpose of dis- 
*' patch at particular seasons; that there would not 
*' have been that systematic arrangement by which 
'- every different quality of soil is made to produce 
" those crops, and to feed those sorts of animals for 
" which it is best calculated ; that it would have 
" been almost impracticable to practise convertible 
" husbandry at all, which by combining tillage and 
" pasturage on the same farm, contributes so power- 
" fully to sustain and augment the fertility of the 
*' soil ; that the surplus produce for the supply of 
'' towns would have been inconsiderable at all 
" times, and from the general poverty of small 
" tenants brought to market in too great abun- 
" dance in the early part of the season, instead 
" of apportioning it over the whole year ; and 
" in bad seasons there would have been no sur- 
" plus at all : — and that in short, as no person 
•' of capital or enterprize would ever have cn- 
'• tered into the profession, our extensive moors 
" and morasses, and indeed all our inferior 
" soils, must have remained in their natural state, 
♦' or been partially and most unprofitubly im- 


" proved under the delegated iiianagemeni ul 
" great proprietora." 

It is HOW, I think, high time to conclude the 
bubject of agriculture; and it is necessary to say 
only a few words on Mining, a branch of industry 
which I have placed next to agriculture, on account 
of its analogy to it, in affording a rent. 

Mines, like the surface of the earth, yielding dif- 
ferent quantities of produce according to their re- 
spective degrees of richness, all those which are not 
of tiic poorest quality must afford a rent. 


The price of the metals, then, like that of corn, 
miist be regulated by the expense of producing it 
from the last mines opened ? 

MRS. B. 

Your observation applies, with more correctness, 
to the produce of the surface of the earth ; the land 
fast cultivated is generally the poorest, or labours 
under other disadvantages, which have prevented 
its being sooner brought under the plough; but 
mines being less open to observation, new mines 
are not unfrequcntly discovered, which yield more 
metal than others previously worked. You should 
rather sny, therefore, that the price of metal is 
regulated by the expense of extracting it from the 
poorest mines now worked. 


'J'Jic sainc laws apply to coal-mines, which, 
JiotwiUislaiuling the great assistance derived 
from machinery, give work to several hun- 
dred thousand labourers who earn their mainte- 
nance, besides the profits of their employer and the 
rent of the proprietor ; and this rent is in general 
more considerable than that of agricultural land, as 
the produce of coal-mines is more valuable than 
that of the soil. 


Tlie mines containing metals are, I suppose, of 
still greater value ? 

MRS. B. 

Yes, and their rent proportionally higher ; but 
the profits of the capitalist who rents them, and of 
the labourers who work them, is not greater. As 
the value of a mine, however, depends upon the 
quantity, as well as on the quality of the metal it 
affords, it frecjucntly happens that a lead-mine will 
fetch a higher rent than a silver mine. The expense 
of working coal-mines is less than that of metallic 
mines. The coal requires nothing more than to be 
extracted from the earth : but with the metals the 
labour is much more complicated; they nmst be 
separated from the ore in the furnace, and undergo 
a variety of processes before they are fit for the pur- 
poses of art. 

The risk and uncertainty attciiuiug mining is 


greater than that of any other employment ot 
Ccipital ; and accordingly we find both larger for- 
tunes made, and more people ruined in that than 
in any other branch of industry. 


The chance of gain, then, compensates for the 
risk of loss ; but upon the whole 1 suppose the 
profits arc similar to those derived from other mode* 
of en)ploying capital ? 

MRS. B. 

I am inclined to believe the profits of mining to 
be rather lower than the common standard. In all 
hazardous enterprises men are prone to trust to 
their good Ibrtune, and generally consider the 
chances more in their favour than an accurate 
calculation would warrant. This is evinced by 
the readiness with which men venture to stake 
their money in the lottery, though it is well known 
that the chances of gain are decidedly against 
them. A mine is a more advantageous lottery 
no doubt than that of government, but it con- 
tains a prodigious number of blanks, and only a 
few great prizes. Sanguine hopes and cx))ect- 
ations in some measure supply the place of actual 
gains ; yet if the average profits of mining should 
at any time fall so low as to discourage the spirit 
of enterprise, and diminish the requisite supply of 


nietalb, their price would rise until it had brought 
back a sufficient capital to that branch of industry. 
1 have mentioned fisheries as a source of employ- 
ment for capital, and a means of affording a revenue. 
Very large capitals are engaged in the whale, the 
cod, and the herring fisheries, besides those smaller 
ones which supply the country with fresh fish. But 
as the sea in which these fisheries are carried on is 
not susceptible of becoming private property, they 
yield no rent. There are however some considera- 
ble inland river fisherieswhich belong to individuals, 
and bring in a rent. No fewer than forty-one 
different sabnon fisheries upon the river Tweed 
are rented for several thousands a year ; and I am 
informed that the Duke of Gordon lets a salmon 
fishery on the Spey for 7000/. a-year. In the 
Scotch fisheries it is very common to take four or 
five score of salmon at a draught. In England 
there are also considerable salmon fisheries in the 
Tyne, the Trent, the Severn, and the Thames. 


The rent of fisheries depcmls, I suppose, upon 
some rivers abounding more with fish than others. 

MRS. B. 

Yes ; all nent is derived from the same principle, 
the lesser (juantity of labour required to produce 
the connuodity in some situations than in others. 



We have already noticed the manner in which a 
revenue is obtained from manufactures; what fur- 
ther observations we have to make on this branch 
of industry we shall defer till we enter on the subject 
of trade, with which it is so naturally connected. 


And will that be the subject of our next con- 
versation ? 

MRS. B. 

No ; we have yet many general remarks to make 
upon revenue. And it will be necessary also, be- 
ibre we turn our attention to trade or commerce, 
that you should understand the nature and use ot 
money, without a knowledge of which it would 
be extremely difficult to render the subject clear 
and perspicuous. 











I THINK I now understand very well how an 
income is derived from agriculture and manu- 
lactures ; and also how it is produced by trade ; 
but there are many men of property who follow 

N 2 


none of these occupations ; liow, ihereloie, can 
their capital yield an income ? 

MRS. B. 

When a man possesses a very large property, he 
frequently will not be at the trouble of employing 
it himself; but will engage some other person to 
do it for him. You have seen that a landed pro- 
prietor who does not farm his own estate derives a 
revenue from the farmer in the form of rent. 


But I allude to men of fortune without landed 
property, who live upon tlieir income, although 
their capital is not employed. 

MRS. B. 

Reflect a moment, and you will be convinced 
that no capital can yield an income without being 
employed. If, therefore, the owner docs not in- 
vest it in some branch of industry himself, another 
person must do it for him. A capitalist under 
such circumstances may be supposed to say, " I 
" am possessed of an ample stock of subsistence 
" for labourers, and of materials for workmanship, 
** but I will engage some other person to take 
" charge of so troublesome an undertaking as that 
" of setting the people to work, and collecting the 
" profits derived from their labours." 



This person must be handsomely remunerated 
for tlie time and pains he bestows on the manage- 
ment of a capital which is not his own. 

MRS. B. 
No doubt ; a considerable share of the profits 
derived from the use of capital must go to him 
wlio takes charge of it ; but when a man's pro- 
perty is very large, he would rather lose that share 
than be at the trouble of managing it himself. 
Thus you see that the employer and the proprietor 
of capital are frequently diflerent persons. 


Yet I do not recollect ever to have heard of a 
man of fortune making use of an agent to employ 
hi)> capital. 

MRS. B. 

He does not cngajje an agent on his own ac- 
count, but he lends his capital to some person who 
invests it either in agriculture, manufactures, or 
trade, and who pays him so much per cent, for the 
use of it. This is called lending money at interest. 


Is it then simply monet/ that is lent ; or capital 
consisting ol produce? 

N i 


MRS. B. 

It is eventually the same ; for money gives the 
borrower a command over a proportional share 
of the produce of the country. If the money 
would not purchase the things which the borrower 
wanted, it would not answer his purpose ; but it 
will procure him either materials or implements 
for work, mauitenance for labourers, stock for 
farming, or merchandise for trade. In a word, 
it will enable him to exert his industry in what« 
ever way he chooses. 


I should have imagined that it would have been 
more advantageous to the capitalist to have en- 
gaged an agent at a stipulated salary, for the pur- 
pose of undertaking the use of his capital ? 

MRS. B. 

Your plan would probably not answer so well j 
for if, instead of lending his capital at interest, a 
man of property paid an agent to employ ^it for 
him, the agent would be less cautious what risks he 
engaged in, as he would not be a sufferer by lossee. 


But is not the loan of capital at interest liable to 
the same objection ? If the employer of capital 
be ruined, the proprietor of it must share the same 


MRS. B. 

This not unfrcquently happens ; yet there is less 
risk incurred in this mode than if the employer of 
capital could injure the proprietor without being 
himself involved in the same ftite ; and it would be 
so if he acted as clerk or agent, as he would lose 
only his salary, although the proprietor might be 
utterly ruined. 

Prudent men seldom lend capital without good 
security. If the loan is made to a merchant, it is 
usual to re<juire other merchants, or men of pro- 
perty, to become responsible for the payment. If to 
a man of landed property, the capital is lent upon 
the security of his estate; that is to say, if the loan 
be not repaid according to agreement, tlie lender 
has the right to seize that particular property, upon 
tJie security of which the capital was advanced. 
This is called lending money upon the security of 


That must be the best kind of security, for the 
land cannot be made away with. It is making 
fixed capital responsible for circulating capital. 

The man who borrows capital with a view to 
employ it, must necessarily expect to make greater 
profits than will pay the interest of the loan, oilier- 
vrise lie would be no gainer by it. 
N 4 


iMRS. B. 

Certainly. The average profits of the use of 
capital may be estimated at about double the in- 
terest of money. Legal interest, that is to say, the 
highest rate which the law aUows to be given, is 
five per cent., and the usual profits of trade are 
about ten per cent. 


Therefore the lender and the borrower, or in 
other words the proprietor and employer of capital, 
commonly divide the profits arising from it equally 
between them; the one making as much by his 
property as the other by his industry. 

The landed proprietor who lets his land to a 
iarmer, I conceive to be situated in the same man- 
ner as the man who lends his capital at interest, 
neither of them choosing to undertake the employ- 
ment of their capitals themselves, but procuring 
some other person to do it for them; and the rent 
the farmer pays for the use of the land is similar to 
the interest paid for the use of capital ? 

MRS. B. 

It is so ; and the advantages derived from letting 
land are analogous to those that result from the 
loan of capital. We have observed that if the 
farmer, instead of paying a rent, received a certain 
stipend for his labour, and reserved the whole of 



the protluce for the landlord, he would certainly 
be less attentive to the cultivation of the land than 
if his gains resulted from the value of the produce 

There is, however, one essential difference be- 
tween borrowing capital and renting land. The 
man who borrows capital to be employed in trade 
or manufactures, requires nothing more to enable 
him to prosecute his business. Whilst the farmer 
who borrows land cannot undertake the cultivation 
of it without the assistance of another capital, 
which he must either possess or borrow for that 


Then there is another difference. The landed 
proprietor and the farmer do not divide the pro- 
fits arising from the cultivation of the land equally 
between them, as is usually, you say, the case with 
the lender and borrower of capital ; for the farmer 
makes greater profits by the use of the land than 
the proprietor by the rent. 

MRS. B. 

There arc several reasons for this difference. 
In the first place you must recollect that the 
profits of capital vary with the degrees of risk to 
which it is exposed; and then consider tiiat an 
income derived from the rent of land is much 
more secure than any other kind of revenue. For 
N 5 


if the farmer ruin hirasell', he cannot make away 
with the land : he may be obliged to quit his fann, 
but then his stock is liable to seizure for the pay- 
ment of rent. 

Another considerable advantage attached to 
landed property is, that in proportion as agricul- 
ture improves, the produce of the land increases ; 
this augments the profits of the farmer, and enables 
the landlord to raise his rent. And lastly, we 
must call to mind the observations we made on tiie 
origin of rent ; and we shall find that in propor- 
tion as agriculture extends, and new and inferior 
lands are taken into cultivation, the rent of land 
rises. If you weigh all these advantages, you will 
no longer be surprised that a landed proprietor 
should be satisfied with making between three and 
four per cent, of his capital, instead of lending it at 
five per cent, interest, with more or less risk of 
loss, and a certainty that the capital will not im- 


The real profit, therefore, to be derived from 
the loan of capital perfectly secure, is between 
three and four per cent., and whatever is received 
above that sum may be considered as an indemni- 
fication for the risk to which it is exposed ? 

MRS. B. 

If you take the improvable nature of rent, as 


well as its perfect security into the calculation, 
some deduction may be allowed in consideration 
of the certaiii prospect of future increase; the 
profit to be derived from the loan of capital, even 
when the security is perfect, may therefore be esti- 
mated somewhat higher than that which is afforded 
by the rent of land. 

We must now make a few observations upon 
the interest of money. 

The interest of money, or price paid for the 
loan of capital, was formerly much higher than it 
is at present. It has gradually dijuinished for some 
centuries past. 


And why should that be the case ? 

MRS. B, 

We have observed, that as a nation advances 
in opulence, and its population increases, inferior 
soils are taken into cultivation, which has the effect 
both of raising rents and reducing the profits of 
capital ; therefore the lower the profits to be made 
by the use of capital, the lower the rate of interest 
which the borrower can afford to pay for it. Dur- 
ing the reign of the Emperor Augustus, the in- 
terest of money at Rome fell from ten to four 
per cent., owing to the great inff ux of wealth from 
the conquered provinces. In India, where the pro- 
portion of capital to the number of labourers is 

N 6 


comparatively small, wages are extremely low, and 
the profits of capital and interest of money exor- 
bitantly high. The common rate of interest is 
twelve per cent., but I have heard that it is not un- 
usual to make as much as twenty, or even thirty 
per cent, interest. In China, interest is six per 
cent, per month. 


And is interest low in America, where labourer*; 
are scarce and wages high ? 

MRS. B. 

No, it is not; on account of the great profits 
made by agriculture. In a country not yet fully 
peopled, where there is so great a choice of fertile 
land, that scarcely any of an inferior quality is 
brought into cultivation, and consequently where 
little or no rent is paid, the cultivator can afford to 
give high wages, and yet make great profits ; and 
wherever great gains can be made by the use of ca- 
pital, high interest will be given for the loan of it. 
Therefore, though capital has been increasing in 
America more rapidly than in any other country ; 
yet as immediate and advantageous employment is 
found for every accession of capital by the culti- 
vation of new and fniitful lands, the interest of 
money does not fall. 

In all old established fiUly peopled countries the 


low interest of money is a sign of great accumu- 
lation of capital, abundant population, extensive 
cultivation of a variety of soils, liigh price of raw 
produce, high wages of labour, and small profits. 


But I thought that the interest of money was 
fixed by law, and incapable of fluctuation ? 

MRS. B. 

The legal interest is 5 per cent ; it may fall 
below that rate, though in this country it cannot 
rise above it without becoming usury. In former 
times, to receive any remuneration for the loan of 
money, was regarded much in the same light as 
usury is at present ; that is to say, as taking a/i 
unfair advantage of the borrower. 


Such an opinion could have been entertained 
by those only who understood nothing of the re- 
productive nature of capital ; for had tiny been 
aware of the profits to be made by the employ- 
ment of money, they could not have considered it 
as unfair to pay for the use of it. 

MRS. B. 

Our forefathers had no pretensions to a know - 
ledge of political economy ; it is a science of later 


date. The prejudice against lending money at 
interest appears not to liave prevailed in very an- 
cient times, but to have originated in the darkness 
of the middle ages ; for the interest of money was 
legally instituted both amongst the Grecians and 
the Romans. It must have been an established 
practice in the time of Solon, since it is upon record 
that he reduced the legal interest to 12 per cent. 
The Bramins, in India, are said to have taken 
2 \ per cent, monthly so far back as 3000 years, and 
yet legal interest was not established in Europe un- 
til the year 1546. 

Macpherson, in his History of Commerce, makes 
the following observations on the unpopularity of 
receiving interest for the loan of money : " In the 
" year 1251," he observes, " the conseciuence of 
" the clamour and persecution raised against those 
" who took interest for the use of money was so 
" violent, that they were obliged to charge it much 
" higher than the natural price, (which if it had 
" been let alone would have found its level,) in 
** order to compensate for the opprobrium, and 
" frequently the plunder which they suffered; and 
*' thence the usual rate of interest was, what we 
" should now call most exorbitant and scandalous 
*' usury." And what we now call exorbitant and 
scandalous usury proceeds in a great measure from 
a similar prejudice, which prevents the interest of 
money,^like all other pecuniary interests, from find- 


iiig its natural level, and stamps with criminality, 
and the odium of usury, any bargain in which 
money is lent at a higher interest than 5 per cent., 
however great the risk incurred by the lender. Why 
should there be a limit to the terms on which mo- 
ney may be borrowed, any more than to the bor- 
rowing, or I should rather say, to the hiring any 
other commodity ? 


Would not such unlimited freedom of interest 
afford too great encouragement to cajMtalists to 
supply prodigals and thoughtless youths with 
money, and thus facilitate their means of squander- 
in "f it ? 


MRS. B. 

Men of this description find no difficulty in bor- 
rowing of usurers, provided they are able to give 
security for the payment, and without such security 
they would not obtain the loan of money either 
Ironi men of respectability or from crafty usurers. 
The only difierence now is, that they must pay a 
higher price for the loan, because the lender re- 
quires to be remunerated, not only for the use ol 
the money, and the risk he incurs, but also lor the 
ignominy and criminality attached to the proceed- 
ing; this necessarily takes it out of the hands of 
men of honourable character, and throws it into 
ihose of men ^^ha, having no value for reputation, 


are much more likely to take undue advantage of 
the distress of men who are in urgent want of 
money, and of the unguarded thoughtlessness of 
prodigal youth. 

There is yet another means by which a man of 
property may derive an income from his capital 
without employing it himself: it is by lending it to 
a borrower who is distinguished from all others by 
the singularity of his dealings — who borrows not 
only without any intention of making profits by the 
use of the ciijiital ; but also, in general, without any 
prospect of repaying the principal of the debt. 


Without any prospect of repaying the debt ! 
And where can they find men who will agree to 
lend capital on such terms ? 

MRS. B. 

This extraordinary borrower is no other than 
the government of the country. When govern- 
ment makes a loan, that is to say, borrows capital, 
it is for the purpose of spending it as soon as pro- 
cured ; and the proprietors of tliis capital, or, as 
they are usually denominated, the public creditors 
or stockholders, scarcely ever expect that the debt 
should be repaid. Yet notwithstanding this cir- 
cumstance men are willing to lend their money to 
government even upon lower terms than to other 


borrowers. This arises from two causes ; the first, 
tliat the security of government for the punctual 
payment of the interest is better than that of any 
individual; and the second, that the public creditor 
has an indirect means of getting back his capital 
whenever he pleases, without being repaid by 


In what way? 

MRS. B. 

By selling his right to receive the interest to any 
individual who wishes to invest his capital in the 
funds, and who will then stand in the place of 
the original creditor. 


And can he always sell that right for the sum he 
originally lent to government? 

MRS. B. 

Not always exactly; he will sometimes get more 
and sometimes less, according to the state of the 
market. If there arc many creditors or stock- 
iiulders desirous to sell, and but few capitaUsts 
wishing to buy, he will get less; if many buyers 
and few sellers, he will obtain more: in the latter 
case the stocks are said to'be high, or ri>iing; in the 
former, to be low, or falling. 


But since government spends the capital boi- 
rowed instead of deriving any profit from it, In 
>vhat means is the interest paid ? 

MRS. li. 

It is paid by taxes levied expressly for that 


If, then, government spends what is borrowed, 
the capital no longer exists, and the stockholder 
remains possessed of only an imaginary or iictitious 

MRS. B. 

He remains possessed of the right to receive an 
annual payment, or annuity, equal to the stipulated 
interest, till the government pays him back the 
principal. And this annuity (where the government 
can be depended upon) will always sell for its value 
to such persons as have capital that they wish to 
lend at interest. It is thus that the stockholder is 
enabled to realize this fictitious capital, whenever 
he chooses, by selling his stock. The capital is, 
therefore, not lost to the individual; but it is en- 
tirely lost to the country. The stock may be sold, 
but the sale doca not re-create the capital that has 
been spent ; it merely transfers to the seller capital 
already existing in the hands of the buyer, and 
which would equally have existed whether the stock 


Were sold or not. So long, however, as it can he 
cxchangc<l for real capital, and in the mean-time 
produces a substantial income to the possessor, it 
affords him all the enjoyments that can be derived 
train weiiith. 

Antl is it not very injurious to the prosperity of 
a country 'that the government should spend its 
capital ? 

MRS. B. 

No doubt; but under some circumstances it is 
an unavoidable evil. In cases of urgent danger 
during a war, it is sometimes necessary to raise 
larger sums of money, and with more expedition, 
than can be obtaineii by taxes ; recourse is then 
had to loans, which, if not paid off, accumulate 
by repetitions, and become at length a heavy na- 
tional debt, which is a great burden to the country, 
owing to the taxes that must be raised in order to 
pay the interest. 

We may return to this subject at some future 
time; let me now ask you whether you fully muier- 
fetand how those who do not employ their capital 
themselves derive an income from it ? 


Through the agency of ollu rs, who, if the ca- 
pital consists in land, pay them rent, if iti money, 
pay them interest, 


MRS. B. 

Very well ; Uikc care, however, not to be mislet! 
by the term monexf^ for no man's capital really con- 
bists ill money. It must consist either in lands or 
saleable produce, rude or manufactured; capital is 
merely estimated in money. And you caimot, as I 
said before, have clear ideas on this subject until 
the nature and use of money have been explained 
to you. 

We have now examined all the modes by which 
men derive a revenue from their capital; there yet 
remains to be noticed a class of men who are main- 
tained by the revenue of others. 


Do you mean labourers, who are maintained by 
wages, and bring a profit to their employers ? 

MRS. B. 

No; these, whom we have distinguished by the 
name of productive labourers, are maintained by 
the capital of others; whilst the class of men to 
whom I now allude are maintained by the inco7ueof 
others. They are labourers, it is true; but of this 
peculiar description, that their labour is totally un- 
productive; they consume without re-producing: 
their labour, therefore, can add nothing to the 
future wealth of the country, and hence they arc 
called unproductive labourers. 



1 think 1 guess what description of people 
you mean ; are not menial servants unproductive 
labourers ? 

MRS. B. 

Yes, they are; for their labour, however useful, 
does not augment the riches of the country. A 
productive labourer is paid out of the value of the 
work he produces : this work remains with his 
employer, and may be either accumulated or ex- 
changed for other commodities; but the labour of 
the menial servant, so far from increasing the re- 
venue of his master, is an expense to him, his 
wages being necessarily paid with the produce of 
some other labour. 


There is no doubt an essential difference between 
these two kinds of labourers : keeping a nuniber of 
workmen is a source of wealth, whilst keeping x 
number of menial servants is a source of expense. 


The one is tiie employment of capital ; the other 
the expenditure of inct)me. Franklin, in his Cor- 
respondence, expresses this difference with his usual 
perspicuity and neatness : — " The first cit'iaentsof 
" wealth are obtained by labour from the earth and 
" waters. 1 have land and I raise corn : with this 


" I feed a family that does nothing ; my corn will 
" be consumed, and at the end of the year 1 shall 
" be no richer than 1 was at the beginning. But 
" if, while I feed them, I employ them, some in 
" spinning, others in liewing timber and sawing 
" boards, others in making bricks for building, 
" the value of my corn will be arrested, and re- 
" main with me, and at the end of the year we 
" may all be better cloathcd and better lodged. 
" And if instead of employing a man, I feed, in 
" making bricks, I employ iiim in fiddling for me, 
" the corn he eats is gone, and no part of his raa- 
" nufacture remains to augment the wealth and 
" conveniences of the family : I shall therefore be 
" the poorer for this fiddling man, unless the rest 
" of my family work more or eat less to make up 
" the deficiency he occasi<ms." 

But the class of unproductive labourers is far from 
being confined to menial servants ; it extends to all 
the servants of the public: actors, singers, danccr;j, 
and all those who are maintained by the productive 
labour of others, are of this description. 


Is it not to be regretted tl)at those people 
cannot be compelled to a more useful mode of 
employment ? 

MRS. B. 

Their labour, though of an unproductive nature, 



is freiierally useful. Servants, for instance, by re- 
lieving the productive labourer of much necessary 
work, enable him to do more than he could other- 
wise accomplisli. Thus a man engaged in the 
employment of a considerable capital can spend his 
time to greater advantage, both to himself and to 
the community, than in cleaning his own shoes and 
cooking his own dinner. 


The use of servants is evidently attendwl with 
some of the benetits of the division of labour. 

MUS. B. 

You will probably be surprised to hear that 
many of the most valuable ranks of society are in- 
cluded in the class of unproductive labourers. The 
divine, the physician, the soldier, ministers of state, 
and magistrates, are of this description. 


I did not imagine that the class of unproductive 
labourers had been so respectable. And although 
their labour is of an unproductive nature, tluy arc, 
1 think, in many instances, more valuable members 
of society than some of the productive labourers. 
A nuigistratc, who faithfully administers justice; a 
physician, who restores health ; a clergyman, who 
teaches religion and morals; are certainly of more 


essential benefit to society, than the confectioner or 
the perfumer, or any of those productive labourers 
who are employed in the fabrication of luxuries. 

MRS. B. 

No doubt they are. I do not, however, con- 
sider luxuries as wholly devoid of advantage. In a 
future conversation we shall treat of the subject of 
expenditure ; we shall then have an opportunity of 
examining, how far luxury is beneficial, and under 
what circumstances it is prejudicial to the welfare 
of society. 



TINCTION betwei:n exchangeable value and 









MRS. B. 

Before wc procc^l to the subject of trade, it is 
necessary that you should understand what is meant 
:iy the value of commodities. 



That cannot be very difficult; it is one of tlic 
first things wc learn. 

MRS. B. 

What is learnt at an age when the understanding 
is not yet well developed, is not always well learnt. 
What do you understand by the value of com- 
modities ? 


We call things valuable which cost a great deal 
of money ; a diamond necklace, for instance, is 
very valuable. 

MRS. B. 

But if, instead of money, you gave in exchange 
for the necklace, silk or cotton goods, tea, sugar, or 
any other commodity, would you not still call the 
necklace valuable ? 


Certainly I should ; for, supposing the necklace 
to be worth 1000/., it is immaterial whether I give 
1000/. in money, or 1000/. worth of any thing 
else in exchange for it. 

MRS. B. 

The value of a commodity is therefore estimated 
by the quantity of other things generally for which 
it will exchange, and hence it is frequently called 
exchangeable value. 




Or, ill Other words, the price of a comnioility. 

MRS. B. 

No ; price does not admit of so extensive a sig- 
nification. The price of a commodity is its ex- 
changeable value, estimated in money only. It is 
necessary that you should remember this distinction. 


But what is it that renders a commodity valu- 
able ? I always thought that its price was the cause 
of its value; but I begin to perceive that I was 
mistaken : for things are valuable independently of 
money; it is their real intrinsic value which induces 
people to give money for them. 

MRS. B. 

Certainly ; money cannot impart value to com- 
modities ; it is merely the scale by which their value 
is measured ; as a yard measures a piece of cloth. 


I think the value of things must consist in their 
utility, for we commonly value a commodity accord- 
ing to the use we can make of it. Food, clothing, 
houses, carriages, furniture, have all their several 

o 2 


MRS. B. 

That is true ; yet tliere are some things of tlie 
most general and important utility, such, for in- 
stance, as hght, air, and water, which, however 
indispensable to our welfare, hove no exchangeable 
value ; nothing is given for them, nor can any 
thing be obtained in exchange for them. (Jtility, 
therefore, does not in all cases produce exchange- 
able value. 


No one will give any thing for what is so plen- 
tiful, and so readily obtained that every one may 
have as much as he requires, without making any 
sacrifice; but as light, air, and water, are essential 
even to our existence, surely they should be 
esteemed valuable. 

MRS. B. 
No doubt tliey arc, but it is in a point of view 
different from that of exchangeable value. Dr. 
Adam Smith distinguishes two kinds of value ; the 
one arising from utility, the other from what can 
be obtained in exchange. He says, " The word 
" value^ it is to be observed, has two different 
" meanings : it sometimes expresses the utility 
" of some particular object, and sometimes the 
" power of purchasing other goods which the pos- 
*' session of that object conveys. The one may be 


" callwl value in iisc, the other value in excfiangc 
" The thing!- winch have the ;;ie;it est vahic in use, 
•' have iVeijuentIv little or no vahie in exchange; 
*' ami, on the contrary, tliose that have the grcat- 
" est value in exchange, liave frecjuentiy little or no 
" value in use. Notliing is more useful than water, 
" but it will purchase scarce any thing ; scarce 
" any thing can be had in exchange for it. A 
" diamond, on the contrary, has scarce any value 
*' in use, but a very great quantity of other goods 
" may frequently be had in exchange for it." 

Nature works for us gratuitously; and when 
she supplies us with articles in such abundance, 
that no labour is required to procure them, those 
articles, however useful they may be, have not ex- 
changeable value : but no sooner does tlie hibour of 
man become necessary to procure us the enjoyment 
of any commodity, than that commodity acquires 
a value; either a price is paid for it in money, or 
other things arc given in exchange for it. Light, 
air, antl water are the free and bountiful gifts olf 
nature, but if man constructs a lamp, we must 
pay for the light it diffuses: if we arc indebted to 
his labours for a vejitiiator, or even a fan, wc pay 
the air they procure us; and when water is con- 
veyed through pipes into our houses, raised by 
pumps, or brought to us in any manner by the art 
ot man, a price is paid for it. 

I'tiiity m:iy therefore be considered as the sole 
o 3 


cause of lvalue in use, whilst value in exchange may 
be produced by any circumstiuicc which renders 
the pn*,scssion of an (.bject so ditlicult of attainment, 
and at the same time so desirable, that men are 
wilHufr to give something in excimnge for it. 
Thus not only utility, but beauty, curiosity, fashion, 
rarity, and many other qualities, may create ex- 
changeable value; and it is to this value that, in 
political economy, we chiefly confine our attention. 


There are many articles of luxury which are 
perfectly devoid of utility, such, for instance, as 
pictures, jewels, artificial flowers, and other orna- 
ments: these are valued either for their beauty, 
their curiosity, or their rarity. 

But, Mrs. B., if an object is valuable in pro- 
portion as we are des^irous to obtain it, its value 
will vary with respect to different persons to whom 
its possession may be more or less desirable. 
Thus, medicine to the sick, and food to the 
hungry, will be more valuable than to the healthy 
and the well fed. 

MRS. B. 

The value of a commodity is not estimated by 
the sacrifice which those in the most urgent want 
would make rather than be deprived of it ; but by 
what is requisite to be given in exchange, in order 
to obtain it. The apothecary knows that if he en- 


ilcavoureJ to take advantage of the sick man's 
necessity to raise the price of his medicine, il 
would be procured at another shop ; and that in- 
stead of making an exorbitant j)rofit, he would 
lose a customer; and if the hunjirv man were at- 
tempted to be imposeil upon in a similar manner, 
he would purcliase food elsewhere: thus compe- 
tition (under ordinary circumstances) prevents un- 
due advantage being taken of tlie wants of in- 


What is it, then, that regulates the exchange- 
able value of commodities ; you have said that it 
was estimated by the cjuantity of things given in 
exchange for them, but I wish to know what it is 
that determines the specific quantity to be given ? 

MRS. B. 

It is fundamentally regulated by the cost of 
production of the commodity, that is to say, the 
cxj)ensc laid out upon it in order to bring it to a 
saleable state. A great deal of labour has been 
bestowed upon that book-case; if the workmen 
who made it were not repaid, they would no 
longer make book-cases, but seek some mort- pro- 
fitable employment. 'I'lu- piice of a commodity, 
therefore, mubl be suilicieiit lo delray the cost of 

o 4 



Bin, Mrs. B., the money which this book-cast 
cost does not all go to the workmen who made it ; 
the materials of which it is made must be paid for: 
tlie upholsterer who sold it derives a profit from it. 

MRS. n. 

It was his capital which purchased the raw ma- 
terials, which fiunislicd the tools, and set the jour- 
neymen to work ; without this aid the book-case 
could not have been made. The price of commo- 
dities is the reward not only of those who prepared 
or fabricated them, but also of every productive 
labourer xvho has been employed in bringing them 
to a saleable state, for each of these concurred in 
giving value to the commodity. 

We have formerly observed that no work can be 
undertaken without the use of capital, as well to 
maintain the labour as to supply him with the im- 
plements to work with, and the materials to work 
upon. Subsisting upon this maintenance, and 
working with these implements, he is to transform 
the useless trunk of a tree into a useful or beautiful 
piece of furniture, which acquires value in pro- 
portion as it becomes an object of desire. Tlie profit 
of capital is, therefore, a component part of the 
value of a commodity, as well as the wages of la- 
bour. There remains yet a third component part 


of the value of a commodity, wliich a little reflec- 
tion will, I think, enable you to discover. 


Agricultural jiroducc must, besides the wages of 
labour, and profit of capitiil, pay the rent of the 
land on which it is raised. But this will not be 
the case with manufactured goods. 

Mils. B. 

The raw materials for manufactures are all, or 
almost all, the produce of land, and consequently 
must defray the expense of rent, the same as corn 
or hay. But rent does not enter into the price of 
commodities in the same manner as the profit of 
capital, or the wages of labour, because, as you may 
recollect, rent is the effect, not the cause oS \\\c high 
price of commodities. Dr. Smith observes, that 
" high or low wages are the causes of high or low 
" price; high or low rent is the effect of it. It is 
" because high or low wiiges or profit must be 
" n)adc, in oiiler to bring a particular commodity 
" to market, that its price is high or low. But it 
" is because its price is high or low, a great deal 
" more, or very little more, or no more than wliat 
" is sufficient to pay those wages and profit, that it 
" affords a high rent, or a low rent, or no rent at 
- all." 

Let us now observe how the value of a comnio- 
o 5 


dity resolves itself into these tluee component parti*. 
Take, for instance, a load of hay ; its price pays, 
first, tho wages of the labourer who cut down the 
grass and made it into hay; then the profits of the 
farmer who sells it ; and lastly, the rent of the field 
in which it grew. This, therefore, constitutes the 
whole cost of production of the load of hay ; and 
may be called its nalurul value. 


Btit, Mrs. B., rent cannot enter into the cost of 
])roduction of a commodity if the materials of which 
it is composed are raised on land of too poor a qua- 
lity to afford a rent ? 

MRS. B. 

Certainly not ; these three component parts ot 
the natural value of a commodity are not always 
essentially necessary to its production ; one or other 
of them may occasionally be deficient. 


It is a general rule, which admits of exceptions. 
Pray let me try whether I could trace the various 
payments made to the several persons concerned in 
the production of a loaf of bread. — Its price must 
first pay the wages of the journeyman baker who 
niaile it; then the profits of capital of the master- 
baker who sells it ; next the wages of the miller 
who ground the corn, and the profits of the master 


who employs him ; afterwiirils the wages of the 
several husbandmen who cuUivated tlie field ol 
corn ; the profits of the farmer; and lastly, a por- 
tion of the rent of his farm. 

MRS. B. 

Exactly so. Thus you see that the value of a 
commodity is composed of three parts, rent, profit^ 
and u:agcs ; the rent of the proprietor of the land, 
the profits of the several employers of capital, and 
the wages of the various hiboiucrs who give it 
qualities which render it an object of desire, and 
consequently a saleable commodity. 

It sometimes happens that the proprietor of 
land, and farmer, and even the labourer, are united 
in one individual. We have already observed, that 
in many parts of America the cultivators of the 
land are both proprietors and labourers, and reap 
the reward of rent, profit, and wages. 


And in this country a cottager who possesses a 
little garden cultivatcti by his own hands, and of 
which he brings the produce to market, likewise 
concentrates in himself all the advanlHges of pro- 
prietor, capitalist, and labourci': for he sells his 
vegetables for the same pricf as a market-gardener, 
who has to deduct from the price the rent of the 
garden and the wages of the labourer, 
o (\ 


MRS. B. 

But he is not, therefore, tlie greater gainer, toi 
if he has no rent to pay, it is because he has laid 
out a capital in the purchase of the land ; and if he 
pays no wages, it is because he works himself, and 
employs that labour which might otherwise bring 
him wages : then some capital is used to purchase 
garden-tools, manure, or whatever may be requisite 
for the culture ot iiis garden. 


I think I now understand perfectly well how 
rent, profit, and wages enter into the value of every 
commodity. I may say, for instance, so much 
Tent, profit, and wages has been expended in the 
production of this carpet, and therefore I must 
pay a sum of money for it, if I wish to purchase 
it; but how am I thence to infer what sum of 
money it is worth ? 

MRS. B. 

By applying the same scale or measure to esti- 
mate the value of money, that you have applied to 
estimate the value of the carpet. Examine what 
quantity of rent, profit, and wages was bestowctl 
ui)on the production of the money, and you will be 
able to abccrtain how much of it should be given in 
exchange for the au-pct, or, in other words, what 
the carpet is worth in money. I paid JO guineas 


ihv tliis carpet ; I conclude therefore that the cost 
ol [)roduction of the carpet is equal to the cost of 
production of 20 guineas. 


But it would be impossible to calculate with any 
degree of accuracy the quantity of rent, profit, and 
wages which a conmiodity cost, and still less that of 
the gold or silver for which it is sold. 

' MRS. B. 

Nor is it necessary to enter into this calculation ; 
it is by long experience only that the world forms 
an estimation of the relative value of different com- 
modities, sufficiently accurate for the purposes of 
exchange. The calculations to which we have been 
alluding, though true in principle, are by no means 
susceptible of being brought into practical use. 


Yet when barter was first introduced, one savage 
might say to another: * It is not just to offer me a 
iiare, which is tlie produce of a day's hunting, in 
exchange for a bow which I have spent three days 
in making ; 1 will not part with it unless you give 
me also the fruit which you gathered in the woods 
yesterday, and the fish you caught the day before; 
in short, I will not exchange the protlucc of my 
toil and trouble, for less than the produce of an 


equal share of your toil and trouble.' And surely 
this is much more clear and simple reasoning than 
to say that the bow is worth so much money ? 

MRS. B. 

To a savage unacquainted with money it cer- 
tainly if^ ; but I believe that in the present times 
people understand better the value of a commodity 
estimated in money. 


But if it were practicable to calculate with pre- 
cision the ([uanlity of rent, profit, and wa<^es which 
had 1)t'en expended on the production of commodi- 
ties, tliat, I suppose, would constitute an accurate 
measure of then* value. 

MRS. B. 

No; because there are other circumstances, 
which, as we shall presently observe, affect the 
value of commodities. Besides, it would be im- 
possible to calculate with any degree of accuracy 
the cost of production of a conmiodity, since 
rent, profit, and wages, are all liable to vary in 
their own value; and we cannot adopt, as 2i Jixcd 
standard, a measure which is itself subject to 
change. 1 f we were to measure a piece of cloth by 
a yard measure, which lengthened at one season 
of the year and shortened at another, it would not 


OS VALIL AM) I'lUC E. 30.^ 

enable iis to ascertain the lc-n<;tli ot' the pieee of 
cloth. Now rent varies nnich according to the 
situation of the land, and the natiu'c of the soil. 
Profit, acc()rdiii<^ to the abundance or scarcity of 
capital ; but nothing fluctuates more than the wages 
of labour; it differs not only in different countries, 
but even in the same town, aecordin<^ to the de- 
mand tor labour, the strength, the skill, anil the 
ingenuity of the labourer. A skilful artisan may 
not only do more work, but may do it in a superior 
manner, and he will rccjuire pavment in the arti- 
cles of his workmanship, not oidy for the labour 
he lias bestowed on them, but also for the j)ains ho 
has taken, and the time ho has spent in ac(juiring 
his skill; the wages of a superior workman are 
for this reason much higher than those of a com- 
mon labourer. Since therefore neither the quantity 
nor the quality of the labour bestowed on a com- 
modity can be determined by the number of days 
or hours employed in producing it, time is not a 
measure of the value of labour; we must take intt) 
account the digrees of skill and attention which the 
work may require, as also the hcallhy, pleasant or 
unpleasant, easy or severe nature oi' the employ- 
ment, all ol which are to be paid acc^rdingly. 


Thus the bow which employed the savage during 
three days, might be worth twice the labour of the 


Other savage eluring tiie same period of lime; lor 
iiutcli less skill is re<juired to be a hunUiuun, than 
to be a fabricator of bows and arrows. 

iMIlS. «. 

On the other hand, we find that cifijht hours of 
the labour of a coal-heaver will be paid much higher 
than tlie same number of hours of a weaver's la- 
lK)ur, because, although the latter requires more 
skill, the first is much more severe and unpleasant 
labour. But the weaver will receive greater wages 
than a farmer's labourer, because the work of the 
latter is both more healthy and requires less skill. 

Now since it is impossible to enter into a calcu- 
lation of all the shades of these various difTicuities, 
rent, profit, and labour can never form an accurate 
standard of value. 


They have at least enabled me to acquire a much 
more clear and precise idea of value than I had 

MRS. B. 

Your idea of value is however yet far from being 
complete ; for there are, as I have just observed, 
other circumstances to be considered independently 
of the cost of production, which materially influ- 
ence the value of commodities. In a besieged town, 
for instance, provisions have frecjuently risen to 


twenty or thirty times tlu-ir natural value, and have 
increased jiroportionally in price. 


'J l)eir increased price in this case is owing merely 
to the scarcity, not to any increase of value, for were 
they as plentiful as usual they would sell at the 
usual price. 

MRS. B. 

Their high price is the consequence of their in- 
creased value, for they would not only sell for ;i 
greater sum of money, but also exchange for a 
greater quantity of any commodities, except such 
as are convertible into food. 

Uidess perhaps it were giuipowdcr, or any kind 
of aniujunition, which in a besieged town might be 
as much in request as food. 

MUS. fi. 

Certainly ; in ihut cisc aiuinunition would rise 
in value as well as provisions. 

Plenty and scarcity arc, then, circumstances 
which considerably ail'ect the value ol" couiuiodities. 
Tell me whetlrcr you understand the meaning of 
the word*, plenty and scarcity. 


Ves, «ureiy ; when there is a great (jtiantiiy of 


ail}' thing, it is said to be plentiful ; — when very 
little, it is scarce. 

MRS. B. 

If there was very little corn in a desert island, 
should you say there was a scarcity of corn there ? 


No ; because as there would be no one to eat it, 
none would be wanted ; and scarcity implies an in- 

MRS. B. 

And when a few years ago there was a scarcity 
of corn in this country, do you think that the whole 
of the island produced only a small quantity ? 


No; not positively a small quantity, but a smaller 
quantity than was required to supply the whole of 
the population of the country with bread. 

MRS. B. 

Plenty and scarcity are therefore relative terms : 
a scarcity neither implies a small quantity, nor 
plenty a large one ; but the first implies an insuffi- 
ciency, or less than is wanted ; the last as much, or 
perhaps more than is required. When there is 
plenty, the supply of the commodity being at least 
equal to the demand, every one who can pay the 
cost of its production will be able to purchase it- 


If, on the contrary, the commodity is scarce, some 
of these must go without it, and the apprehension 
of this privation produces competition amoj\gst 
those who are desirous of buying tlie commodity, 
and this raises its value above the cost of produc- 


This then is the cause of tlie rise in the price ot 
provisions in a besieged town ? 

MRS. B. 

Yes ; or during a famine, or in any case of 
scarcity. Whenever, on the contrary, the supply 
exceeds the demand, the price will fall below the 
natural value of the commodity. 

You see, therefore, that the natural value and 
excluingeahle value do not always coincide. 


Value and wealth are, then, far from being sy- 
iionimous tej*ms ; for I perceive that the increased 
value of food in a time of scarcity indicates a di- 
minution of wealth i 

MRS. B. 

Certainly. Wealth depends on the abundance 
of connnodities possessed, no matter what their 
production cost, whether made by man or by ma- 


chinery, whether obtained by fair or by fraudulent 
means. The Romans were wealthy by conquest, 
the Carthaginians by industry. Machinery aug- 
ments the wealth of a country by facilitating the 
production of commodities, whilst by diminishing 
their cost of production, it reduces the value of 
those commodities. 

The exchangeable valWe consists of the natural 
value, subject either to augmentation or diminu- 
tion, in proportion as the commodity is scarce or 


iso that the price does not always correspond 
with the cost of production. 

MRS. B. 

Certainly not. 


When you say that the supply exceeds the de- 
mand, you do not, I suppose, mean that there is 
more of the article than the whole of the population 
can consume or use ; but more than can be con- 
sumed by those who can afford to pay its natural 
pi'ice ? 

MRS. B. 

Certainly. Those, therefore, who have the com>- 
inodity to dispose of, rather than allow a surplus to 



be left unsold, will lower its price, so as to render 
it attainable to a class of people who could not 
otherwise afford to purchase it. Hence the demand 
is increased, and becomes by degrees proportional 
to the redundant suj)ply. 

To illustrate this, let us suppose that, by the 
breaking out of a continental war, our foreign trade 
should meet with such obstructions, that great part 
of the manufactured goods we had prepartxl for 
exjwrtation will remain at home and overstock the 
market. The supply in this case exceeding the 
demand, the goods will fall in price below their 
natural value, in order to attract a greater num- 
ber of purchasers ; the consumption will thus be 
increased, but the manufacturers and dealers, 
having been obliged to sell the goods for less than 
they cost to produce, will be losers instead of 
gainers by their industry. 

I recollect that callicoes and English muslins 
were much cheaper during the last war than they 
arc at present ; and the shopkeepers then said that, 
at the price at which they sold them, they did not 
pay for the workmanship, independently of tlic 

MRS. B. 

The cheapness of these goods, although it arose 
from plenty, so far from being a sign of prospc- 


rity, entailed ruin on the manufacturers and ilieir 


But you observed that if the price of a commo- 
dity would not defray all the expenses of produc- 
tion, it would not be made ? 

MRS. B. 

In the case we have alluded to, the fall in price 
did not take place till after the production of the 
commodities ; and the expense of labour having 
been already bestowed on them, it is better to sell 
them at any price than to lose entirely their value. 
But the manufacturers would in future take care to 
fabricate a smaller quantity, in consequence of 
which many of their labourers would be deprived 
of work, and part of their capital be thrown owt 
of employ. 

Plenty and cheapness are really advantageous 
only when they arise from a diminution of the cost 
of production. Thus when the use of any new 
machinery, or other improvement in the process of 
labour, enables farmers or manufacturers to pro- 
duce commodities at less expense, the reduction of 
price is beneficial both to the producer and the 
consumer; to the former, because cheapness in- 
creases the number of purchasers ; to the latter, 
because he obtains the commodity at less expense. 



But when nature gives us a superabundant sup- 
ply of corn, the fall in price it occasions is not, I 
suppose, attended with disadvantage? 

MRS. B. 

If the supply should be so great as to produce a 
glut in the market, and that the farmer should be 
under the necessity of selling his crops below the cost 
of production, the low price is not a benefit ; for the 
evil arising from the check given to industry sur- 
passes the immediate advantage of cheapness of 
corn. Tlic farmers and their labourers would be 
the first sufferers ; but it is probable that, in the 
end, the whole community would feel the effects 
the following season. 


True; for fiirmers would grow cauti(?*is, and 
cultivate less wheat, in order that it might not sell 
below its natural value; and, whilst they would be 
endeavouring exactly to proportion the supply to 
the demand, the season might chance to be less pro- 
ductive than usual, so as to occasion a scarcity of 
com, which would be followed by a rise in the price 
of bread above the expense of its production. 

MRS. B. 

'I'hus, you see, when the supi>ly equals the dc- 


mand, the commodity is sold for its natural value, 
the producer making just the usual rate of profit. 
If the supply exceed the demand, it is sold below 
tiiat value, the competition of producers or dealers, 
to dispose of their goods, lowering the price. II 
the supply is less than the demand, the competition 
of purchasers raises the price of the commodity 
above its natural value, and the dealers make ex- 
traordinary profits. 


It must, then, be the interest of the farmer that 
corn should sell above its natural value; and the 
interest of the people that it should sell below it ? 

MRS. B. 

If we extend our views beyond the present mo- 
ment, it will appear that the interest of the pro^ 
ducer and' consumer of any commodity are the 
same; and that it is for the advantage of both that 
the price and natural value should coincide. If 
the consumer pay less for a commodity than its 
cost of production, the producers will take care to 
diminish the quantity in future, in order that com- 
petition may raise the price; for they could not, 
without exposing themselves to ruin, continue to 
supply the public with a commodity which did not 
repay them. If, on the other hand, the consumers 
pay more for an article than its natural value, the 


producers will be encourngcd by their great })rofits 
to increase tlie supplvj iind the price will coitsc- 
quently fall until it is reduced to the natural vahic. 


I do not understand why the jiroducere of a 
commodity .should increase the sui)ply, if the con- 
sequence is to lessen their profits ? 

-MRS. B. 

We are arguing under thesuppositioji that com- 
petition is free and open, and in that case, you 
know, capital will immediately flow towards any 
branch of industry that aHords extraordinary pro- 
fits. If, therefore, the original producers of the 
profitable commodity did not increase the suppl}', 
they would soon meet with competitors, which 
would compel them to lowei- their j)rice without 
increasing their sale. 

" Price," Mr. Buchanan observes, with great 
happiness of expression, " is the nicely poised 
" balance with which nature weighs and distributes 
*' to her children their respective shares of her 
" gifts, to prevent waste, and make them last out 
" till re-produced." 

We have dwelt a long time upon the subject of 
value; and we may now conclude, that though a 
fluctuation in the exchangeable value of commo- 
dities may be occasioned by various circumstances, 


it will seldom deviate much from the natural valuo, 
or cost of production, which is a variable quantit)', 
to which (when the employment of capital is left 
open) the exchangeable value will always tend to 










MRS. B. 

H.AViN(i ohUiincil some knowIeJ^c of the na- 
ture of viiluc, wc may now proceed to examine 
the use ol money. 

p *J 

316 ON MONEV. 

Without this general medium of exchange, trade 
could never have made any considerable progress ; 
for as the subdivisions of labour increased, insuj^er- 
able difficulties would be experienced in the adjust- 
ment of accounts. The butcher perhaps would 
want bread, at a time that the baker did not want 
meat ; or they might each be desirous of exchanging 
their respective commodities, but these might not 
be of equal value. 


It would be very difficult, I believe, at any time to 
make such reckonings exactly balance each other. 

MRS. B. 

In order to avoid this inconvenience, it became 
necessary for every man to be provided with a com- 
modity which would be willingly taken at all times 
in exchange for good<. Hence arose that useful re- 
presentative of commodities, money^ which, being 
exclusively appropriated to exchanges, every one 
was ready either to receive or to part with for that 


When the baker did not want meat he would 
take the butcher's money in exchange for his bread, 
because that money tvould enable him to obtain 
from others what he did want. 

ON MONEY. 317 

MRS. B. 

Various commodities have been employed to an- 
swer the purpose of money. Mr. Salt, in his Travels 
in Abyssinia, informs us, that wedges of salt are 
used in that country for small currency, coined 
money being extremely scarce. A wedge of rock- 
salt, weighing between two and three pounds, was 
estimated at l-30th of a dollar. 


How extremely inconvenient such a bulky ar- 
ticle must be as a substitute for money coined ; the 
can-iage of it to any distance would cost almost as 
much as the salt was worth. 

MRS. B. 

A commodity of this nature could be used for the 
purpose of money in tho<e countries only where very 
few mercantile transactions take place, and where 
labour is very cheap. Tobacco, shells, and a great 
variety of other articles, have been used at different 
times, and in different countries, as mediums of 
exchange ; but nothing has ever been found to 
answer this entl so well as the metals. They are 
the least perishable of all commodities ; they are 
susceptible, by the process of fusion, of being di- 
vided into any number of parts without loss, and 
being the heaviest, they are the least bulky of all 
bodies. All these pro[)erties reiulcr them peculiarly 

;il8 ON MONEY. 

appiopriatc for tlic purposes of commerce and 


The use of metals as money must be very ancient, 
for mention is made in history of the iron coin of 
the Greeks, and the copper coin of the Romans. 

MRS. B. 
Nor are gold and silver coins of modern date ; 
but they were scarce before the discovery of the 
American mines. The first gold coins were struck 
at Rome, about 200 years before Christ. Those 
of silver about 65 years earlier. Previous to that 
period the as, whicli was of copper, was the only 
coin in common use. 


It is said in the Bible that Abraham gave iOO 
shekels of silver lor the purchase of the field of 
Machpclah, to bury Sarah in — Was that, do you 
suppose, coined money? 

MRS. B. 

No : I believe there was no coined money of so 
ancient a date as the time of Abraham. The me- 
tals were originally used for the purpose of money 
in bars ; and it is mentioned that Abraham 
weighed the silver for the jiurpose ; which would 
have been unnecessary had it been coinod. Before 



the invcnlion of coining, the use of ihc metals as a 
medium of exchange was attended witli great in- 
convenience; it being necessary not only to weigh, 
but also to assay the metal, to ascertain both its 
quantity and its degree of purity. 

The invention of coining superseded this incon- 
venience; for coining money is affixing to a piece 
oi metal a particular stamp or impression, which 
declares that it is of a certain weight and quality. 
Thus the impression on a guinea signifies that it is 
a piece of gold of a certain fineness, weighing 107 
grains nearly. 


Money must also be of great use in fixing the 
value of commodities ; before its introduction the 
butcher and the baker might dispute which was 
worth most, the joint of meat or the loaf of bread 
which they wished to exchange. 

MRS. B. 

Ves; money became useful not only as a medium 
of exchange, but also as a common measure of 
value. You will learn hereafter that it is not, any 
more than laboin-, a very accurate measure, when 
the values of one perii>d are compared with tlie 
values of another distant period ; but for the com- 
mon purposes of traflic it answers sufficiently well. 

Previous to the invention of money, men were 
much at a loss how to estimate the value of their 
1' 1 

320 ON MONEY. 

property. In order to express thnt value they wevo 
necessarily obliged to compare it to something elac, 
and having no settled standard, they would natur- 
ally choose objects of known and established value. 
Accordmgly we read both in Scripture and in the 
ancient poets, of a man's property being worth so 
many oxen and so many flocks anil herds. Dr. 
Clarke informs us, that even at the present day 
tiie Calmuc Tartars reckon the value of a coat of 
mail from six to eight, and up to the value of fifty 
liorscs. In civilised countries every one estimates 
his capital by the quantity of money it is worth; — 
he does not really possess the sum in money, but 
Iiis property, whatever be its nature or kind, Ls 
equivalent to such a sum of money. 


For instance, a man who is worth a capital of 
20,000/. may perhaps not be possessed of 20/. in 
money; but his pro{)crty whether land or commo- 
dities, if sold, would bring him 20,000/. 

\\'lien gold is brought into this country, pray 
how is it paid for? Something must be given in 
exchange for it ; and yet that something cannot bo 
money ? 

.MRS. B. 

Certainly not. A bullion merchant would derive 
no advantage from a trade in which he would be 
employed hi exchanging a certain weight of gold 


and silver in one country, i'or a similar weight of 
gold and silver in another country : he would lose 
not only all the profits of trade, but the expenses 
(if the freight, 6cc. ; so that in fact he would be ex- 
changing 100/., for 90/., or 95/. 

We pay for gold and silver in woolltn cloths, 
hardware, callicoes, and linens, and a variety of 
other commodities. 


Then we purchase gold with goods just as we 
purchase goods with gold ? 

MRS. B. 

Exactly; those who take out goods in exchange 
for goUl bullion, buy goods with gold; only as the 
gold is not coined, it may rather be called an ex- 
change of commodities than a purchase. 


And if the mines should prove less productive 
than usual, or any circumstance should render gold 
scarce, and thus raise its exchangeable value, we 
must export a greater quantity of goods to exchange 
lor the same quantity of gold ? 

MRS. B. 

Undoubtedly. The natural value of gold bullion, 
like that of any otiier commodity, may be estimated 
by the labour bestowed upon it, both to extract 

322 ON MONEY. 

it from the mines, and bring it to the place where 
it is to be sold ; and its exchangeable value fluc- 
tuates according to the proportion of the supply to 
the demand. This fluctuation, however, can be 
discovered only by the greater or smaller quantity 
of goods for which the same quantity of gold 
will exchange. For as gold and silver may be 
bought with any kind of goods, they are not sus- 
ceptible of a standard of value like that of other 
commodities which is estimated in one particular 
article — money. 


As ffold and silver are the standard of value of 

all other commodities, all other commodities, I con- 
ceive, must be affected by an alteration in the ex- 
changeable value of gold and silver? 

* MRS. B. 

And this is the reason why money is not an ac- 
curate standard of the value of commodities: for 
if money by its plenty diminish in value, more 
goods will be given in exchange for it ; it therefore 
enhances the price of commodities, that is to say, 
their exchangeable value estimated in moncij^ and 
renders them cheaper. Whilst if money by its 
scarcity increase in value, more goods will be given 
in exchange for it : it therefore lowers the price 
of commodities, and renders them cheaper. 

ON MONEY. 323 


A deficiency of any article raises its exchange- 
a4>Ie value, and consequently its price, above its 
natural value: thus a deficiency of gold or silver 
would make a smaller quantity exchange for the 
same quantity of goods as before ; and therefore a 
loaf of bread would sell for less money, or, in other 
words, would be cheaper. 

MRS. B. 

Yes; and not only bread, but meat, clothes, fur- 
niture, houses ; ill short, every thing would be 
cheaper, in consequence of the scarcity of the 
precious metals. 


It would appear, then, that a scarcity of money is 
advantageous to a country by rendering things 
cheap ? 

MRS. B. 

When tlie cheapness of commodities arises from 
that plenty which results from a reduction of the 
cost of production, it is very advantageous; but not 
when it proceeds from a scarcity of money. In 
the latter case, the supjjly not being increased, 
commodities are lower in price, without any altera- 
tion in their general exchangeable value. They 
may, therefore, be considered rather as nomiually 
p G 

324 ON MONEY. 

than really clieaper. If, for instance, a loaf of breatl 
should sell for a penny, though there should not 
be a single loaf more in the country than when it 
sold for a shilling, the cheapness would not make 
bread more plentiful. 


But if the price of bread were so low as a penny, 
though the supply shoukl not be increased, the la- 
bouring classes would increase their consumption 
of it so considerably as to produce a scarcity, if not 
a famine, before the next harvest. This nominal^ 
or I would call \i false, cheapness, must therefore be 
prejudicial instead of being beneficial to a country. 

MRS. B. 

The consequence you have drawn from it is 
erroneous ; for the labouring classes would not be 
able to pul'chasc a greater quantity of bread than 
usual, owing to the scarcity of money. The wages 
of labour would not be exempted from the general 
fall in price which this scarcity would produce : the 
labourers, as well as the bread they eat, would be 
paid in pence instead of shillings, and their power 
of purchasing bread would neither be increased 
nor diminished. 


True \ I did not consider that. I suppose then 

o\ >toM;\'. 325 

that if the contrary case occurrecl, that i<, if the 
quantity of money were considerably augmented, 
either by the discovery of a mine in the country, or 
by any other means, a u^eneral rise in the price of 
commodities would be the consequence ? 

MKS. B. 

Undoubtedly ; but without producing any 
scarcity. Therefore, though commodities would 
rise in price, their value would not be increased, 
and the commodities being the same in quantity, 
the public would be equally well supplied; but as 
money fell or became depreciated in value from its 
excess, fewer connnodities would be given in ex- 
change for the same sum ; or more money must be 
paid for the same conmioiiity. A loaf of bread 
might cost two shillings instead of one, but as the 
wages of labour would at the same time be doubled, 
the labourer would sufler no privation from the 
increase of price. You now scm3 the propriety of 
making the distinction ijctween the value anil the 
jmce of a commodity. 

It is very possible for the price ol' a commotlitv 
to rise, whilst its value falls. A loaf of bread may 
rise in price from one to two shillings; but money 
may be so ilejneciatcd by excess that t\i.() shillings 
jnay not procure so much meat, butter, and cheese 
as one shilling did before; therefore a loaf of bread 
would no longer exchange for so nuich of those 

326 ON MONEY. 

commodities, and its exchangeable value compared 
with other things generally would have fallen ; 
while its 'price or exchangeable value estimated in 
monei) only would have risen. 


And when the price alters, how can we distin- 
guish whether it is the goods or the money which 
changes in value ? 

MRS. B. 

There is no point so difficult to ascertain as a 
variation of value, because we have no fixed 
standard measure of value ; neither nature nor 
art furnishes us with a commodity whose value is 
incapable of change ; and such alone would afford 
US an accurate standard of value. 


How useful such a commodity would be ; for we 
cannot estimate the value of any thing without 
comparing it with the value of something else; 
and if that something else is liable to variation, it 
is but of little assistance to us : it is supporting the 
earth by the elephant, and the elephant by the 
tortoise; but we still remain in the same dilemma. 
When a man says he is worth 500 acres of land, 
we can form scarcely any judgment of his wealth, 
unless he tells us what the acres are worth ; his 

ON MONEY. 327 

land may be situated in tlie most IViiitliil parts of 
England, or it may be in the wilds of America, or 
the deserts of Arabia ; and if he values his land in 
money, and says my acres are worth, or would sell 
for 1000/., we can form some notion of their real 
value, but not an accurate one; for we do not 
know what is the real value of the money, wliether 
it is plentiful or scarce, cheap or dear ; nor can we 
ever learn it unless we had some invariable standard 
by which to measure it. 

MRS. B. 

Now supposing money to be depreciated in value 
25 percent., and that the expense of manufacturing 
a piece of muslin, from some improvement in the 
process, fell from four to three shillings a-yard, at 
what price would the muslin sell ? 


It would retain its original price of four shillings 
though it would really be*chcapcr ; for the diminu- 
tion of the value of money would exactly counter- 
balance the diminution of the cost of production of 
the muslin. 

MRS. B. 

Very well. And if, on the contrar}', money 
should become scarce at the same time as the cost 
of production of a commodity diininishcd, then 
these two causes, acting in conjunction instead of 

328 ON MONEY. 

opposition, the commodity would be both no- 
minally and realler cheaper. 


The muslin in that case would fall from four to 
two shillings a-yard.* 

MRS. B. 

In order still furtlier to reduce the price of the 
muslin, we may suppose the supply to exceed the de- 
mand, so as to oblige the manufacturer to sell it 
below its cost of production ; and thus the price 
might fall so low as one shilling or even sixpence 

But of all these reductions of price, that which 
proceeds from a diminished cost of production is 
the only one from which general advantage is de- 
rived. That arising from the depreciation of mo- 
ney producing merely a nominal cheapness ; and 
that which results from an excess of supply being 
decidedly an evil, inasmuch as it creates distress 
and disourages industry. 


It appears, then, from what you have said, that 
an increase or diminution of money in a country 
docs not really affect the pecuniary circumstances 
of any one ? 

* Accurately calculated it would be is. od. 

ON MONF.Y. 32J) 

MRS. n. 

I beg your pardon ; all classes of men are tcm- 
))orarily affected when the change is abrupt ; be- 
cause the due level is not immediately ascertained, 
and until that takes place, the pressure falls un- 
equally. But independently of this, there are 
many classes of people who would be very sensibly 
and permanently injured by an alteration in the 
exchangeable value of money. 

Let us suppose, for instance, that the proprietor 
of a field lets it for a lontr lease at a rent of 20/. 
a-year ; and that some years afterwards, money 
having risen in value, and he being in want of hay 
for his horses, purchases the crop of hay for 15/. 
In this case the landlord will continue to receive 
20/. a-year for the rent, and yet pay but 15/. for 
the produce, so that the farmer will lose 5/., be- 
sides the profits of his capital. Is not this a very 
serious injury ? 



No doubt; and this would be the case with all 
leases; for it is immaterial to whom the farmer sells 
his crops ; if the market-price luib fallen, he must be 
a loser. 


Yes. Were money raised to ilouble its former 
value, the rent would purchase double the (|uantity 
of commodities that it did before: for 100/. in mo- 
ney would exchange for a (luunlity of good?? which 

330 ON MONEY. 

was reckoned worth 200/. previous to the alter- 
ation ; so that rent, though nominally the same, 
would in reality be doubled, and it would be so 
much unjustly taken out of the pocket of the tenant 
to put into that of the landlord. 


This evil, however, admits of a remedy when a 
new lease is made ? 

MRS. B. 

True ; but should the old one have several years 
to run, the farmer may be ruined first; and though 
it is true that it does not violate any law, it is a 
manifest infraction on the security of property, 
which we have observed to be the foundation of 
all wealth, and the strongest motive for its accu- 
mulation. There is no more active and steady sti- 
mulus to industry than the certainty of reaping the 
fruits of our labour. 


Then I suppose that when money is depreciated 
in value, in consequence of being more plentiful, 
the case would be reversed ; the farmer would be 
benefited and the landlord would be the loser ; for 
the rent would not be really worth so much as it 
was before? 

MR.S. B. 

Undoubtedly. Another class of people who arc 


ON iMONEY. 381 

materially affected by an alteration in the value of 
money, are the unproductive labourers. Their pay 
is generally a regular stipend, not liable to the 
same variation as the wages of productive labourers. 
The pay of the army and navy, of all the officers 
under government, and ot" the learned professions, is 
fixed; those persons must therefore suffer all the 
evil, or enjoy all the benefit arising from an alter- 
ation in the value of money. 


The higher classes of the unproductive labourers 
might be able to support the hardship resulting 
from a depreciation of the value of money; but 
how can the common sailor or soldier do so ? It is 
absolutely necessary that their pay should enable 
them to procure a suitable subsistence. 


They are usually paid, partly in money and 
partly in provisions and clothing, and arc not 
therefore such sufferers by a depreciation of money 
as they would be if paid entirely in currency. It 
has nevertheless been found necessary of late to 
augment the pay of both army and navy. 


The value of money has then fallen ? 

332 ON Money. 

MRS. B. 

Yes, it has; but I must defer explaining the 
reason of this fall till our next interview. A third 
class of people who are considerably injured by a 
depreciation of the value of money, are those who 
have lent money at interest for a long period of 
time, persons who live on annuities, and parti- 
cularly the stockholders in the public funds. Not 
only is the interest they receive depreciated, but 
also the value of their capital. The interest they 
receive for their stock remains nominally the same, 
whatever diminution may have taken place in the 
value of money ; and their income being thus ap- 
parently stationary, they partake in the general 
disadvantage of the rise of prices, without being 
enabled to avail themselves of the compensation 
arising from the greater abundance of money. 
Professional men, and all those who receive sala- 
ries, have ultiniately the remedy of an increase of 
pay ; but the stockholder kas no resource : his 
income wastes away, and he perceives his means of 
procuring his accustomed enjoyments gradually 
diminish, without being able to trace the source 
from whence the evil springs ; for as his income 
remains nominally the same, he is not aware of any 
diminution of wealth. 


How very much I have been mistaken in my 

ON MONEV. 333 

idea of money ! Instead of being the only, or at 
least the princi})al article which (as I thought) con- 
stituted wealth ; it seems, on the contrary, to be 
tlie only one which is unworthy of that title, since 
it does not contribute to the riches of a country. 
An excess of money renders other things dear; a 
deficiency of it make them cheaj) ; but it apjiears 
to me that a country is not one atom the richer 
for all the money it possesses. Money, therefore, I 
think, cannot be called wealth, but merely its re- 
presentative, like the counters at cards ; and its 
chief use seems to consist in its affording us a con- 
venient medium of exchange, and a useful, though 
imper/cct standard of value. 

MRS. B. 

Money cannot with justice be compared to 
counteis, for it is not, like them, a sign or repre- 
sentative of value, but really possesses (or ought to 
possess) the value for which it cxclianges. A bank- 
note, which lias no intrinsic value, is simply a sign 
of value; but when you purchase goods for a 
guinea, you give a piece of gold of equivalent value 
in exchange. 

In order to judge whether money forms any |>art 
of the wealth of a nation, let us refer to our de- 
finition of wealth. I believe we said that every 
article, either of utility or luxury, constituted 
wealth. Now I leave you to judge whether mo- 

384 ON MONEY. 

ney, considered either as a medium of exchange, 
or as a standard of value, is not eminently useful : 
since by facilitating the circulation of commoditic> 
it indirectly contributes to their multiplication. 


That is true certainly with regard to the money 
actually required for circulation ; but should it ex- 
ceed that sum, the surplus would be of no value 
to us. 

MRS. B. 

The same might be said of a superfluous quan- 
tity of any kind of wealth ; more tables and chairs, 
or a greater quantity of gowns and coats than are 
wanted, would be equally useless, and would equally 
be depreciated in value. 


But then we could export such commodities, and 
exchange them for goods which we did want. 

MRS. B. 
And why should we not do the same with money ? 
When we have more money than is required for 
the purpose of circulation, we should export it, by 
purchasing foreign goods; without this resource, a 
superfluity of money is perfectly useless, and will 
no more contribute to the production of wealtli, 



ON MONEY. 335 

than a superfluous number of mills would contri- 
bute to the production of flour. 


I had always imagined that the more money a 
country possessed, the more affluent was its con- 

MRS. B. 

And that usually is the case. The error Hes in 
mistaking the cause for the effect. A great quan- 
tity of money is necessary to circulate a great quan- 
tity of commodities. Rich flourishing countries 
require abundance of money, and possess the means 
of obtaining it ; but this abundance is the co?ise- 
quciice, not the cause of their wealth, which con- 
sists in the commodities circulated, rather than in 
the circulating medium. Specie, we have just said, 
constitutes wealth, so far as it is required for cir- 
culation ; but if a country possess one guinea more 
than is necessary for that purpose, the wealth which 
purchased that guinea has been thrown away. 

Yet wliat a common observation it is, that plenty 
of money animates the industry of a country, and 
encourages commerce; and this seems to be proved 
by the miserable and barbarous state of Europe 
previous to the discovery of the American mines. 

336" ON MONEV. 

MHS. B. 

The discovery of America was certainly a very 
efficient cause in rousing the industry of Europe 
from the state of stagnation into which it was sunk 
b}' ignorance and barbarism. But had America 
possessed no mines, I doubt whether the advantages 
we have derived from our connection with that 
country would not have been equally great : we 
could easily find a substitute for the specie with 
which she supplies us, but never for the abundance 
and variety of wealth which she is incessantly pour- 
ing in upon us. The increase of European com- 
forts, of affluence, of luxury, is attributed to the 
influx of the treasures of the new world — and 
with reason ; but those treasures ai*e the sugar, the 
coffee, the indigo, the tobacco, the drugs, &c. 
which A^merica exports, to obtain which we must 
send her commodities that have been produced by 
the employment of our poor. Gold and silver, 
though they have greatly excited our avarice and 
ambition, have eventually contributed but little to 
stimulate our industry. 

It is not to the multiplication of the precious 
metals that we are indebted for our improved agri- 
culture, our prosperous commerce, and the variety 
and excellence of our manufactures: nor do I be- 
iieve that it was their scarcity which deprived our 
ancestors of these advantages. It was because they 
were ignorant and barbarous, and that we are com- 


ON MONEY. 337 

paratively enlightened and civilised ; — compara- 
tively I may indeed say, for error is still active in 
retai'ding the progress of improvement, and this is 
no where more evident than in the anxiety of go- 
vernments to prevent the exportation of specie, 
although it is now above thirty years since Adam 
Smith fully proved the impolicy of this prohibition. 


If the exportation of specie be prohibited, the 
only use that can be made of a superfluous quan- 
tity of it, is to melt it down and re-convert it into 

MRS. B. 

But melting the coin is, in this country, equally 
illegal. A superfluous quantity of money, there- 
fore, (were these laws never infringed,) would be 
necessarily added to the circulation, and depreciate 
the value of the whole. 

How different is the situation of a country where 
no such prohibitory laws exist ! There, no sooner 
does money accumulate so as to occasion a depre- 
ciation of its value, or, in other words, an advance 
in the price of commodities, than the merchants of 
that country export specie, and purchase with it 
foreign goods; while at the same time foreign 
merchants send their goods to the country where 
prices have risen, and exchange them, not for 

338 ON MONEY. 

Other goode, which are dear, but for money, wlncli 
is cheap. 


That is to say, they will sell, but not purchase ? 

MRS. B. 

Precisely : — it is thus that a country is drained 
of its superfluous specie; as this traffic goes on, 
money rises in value, commodities fall in price, and 
foreign merchants again exchange their goods for 
commodities of the country, instead of receiving 
payment for it in specie. 

No apprehension need therefore be entertained 
of ill consequences arising either from the melting 
down or exporting the coin of the country. This 
exportation will take place secretly wiiencver there 
is a superfluity, however severe the law may be 
against it ; the only diffc'rcnce is, that instead of 
being carried on in an open and regular manner by 
merchants of respectability, it is thrown into the 
hands of men of despicable character, who arc 
tempted by extraordinary profits to engage in 
this illicit traflic. 

• Could iSpain and Portugal, countries which re- 
ceive all the precious metals imported from America 
to Europe, have caiTicd into effect the absurd re- 
strictive laws, by which they attempted to keep 
their irold and silver at houic, those metals would 


ON MOtS'EY. 359 

eventually have become of little more value to them 
than lead and coi)pcr. 

If vou have understood what I liavc said, you 
will now be able to tell me what effect will be pro- 
duced in the mercantile transactions of a country, 
which is not shackled by restrictive laws, when a 
scarcity of money produces a fall in the price of 


In that case the very reverse will happen of what 
wc before observed. Foreign merchants will come 
and buy goods, and instead of offering merchandise 
in exchange, will bring money in payment; for 
they will be willing to make purchases, but not 
sales at a cheap market. 

MRS. B. 

It is thus that gold and silver is diffused through- 
out all parts of the civilised world ; whei'ever tl^ere 
- a deficiency, it flows in from every fjuartcr; and 
>herever there is a redundancy, the tide sets in an 
opposite direction. It is the regular diffusion of 
die precious metals, and their constant tendency to 
.in ecjuahty of value, which renders them so pe- 
culiarly calculated for a general standard. \\'^crc 
money as liable to variation of value as the com- 
modities for which it serves as a medium of exchange, 
iL would be totally unfit for a standard. 


Subject of MONEY continued. 





I HAVE been reflecting much upon the subject of 
our last conversation, Mrs. B. ; and it has occurred 
to me that though there may be no permanent 
excess and depreciation of specie in any particular 
country, yet it must gradually decrease in value 
throughout the world : for money is very little 
liable to wear ; a great quantity of the precious 
metals is annually extracted from the mines, and 
though a considerable portion of it may be con- 
verted into plate and jewellery, yet the greater 


ON MONEY. 341 

part, I suppose, goes to the mint to be coined, 
and this additional quantity must produce a de- 
preciation of value ? 

MRS. B. 

An increase of supply will not occasion depre- 
ciation of value, if there should at the same time 
be a proportional increase of demand, and we must 
recollect that the consumable produce of the eartli 
increases as well as that of the mines — the 
commodities to be circulated as well as the medium 
of circulation ; and it is not the actual quantity of 
money, but the proportion which it bears to the 
quantity of commodities for which it is to serve as 
a medium of exchange, that regulates the price of 
those commodities. 

Let us suppose the price of a loaf of bread to be 
one shilling; and say, if 1000 more loaves of bread 
be produced every year by agriculture, and such 
an additional number of shillings be obtained from 
the mines as will be necessary to circulate them, 
the price of a loaf will then remain the same, and 
the value of money will not, by this additional 
quantity of specie, be depreciated, 


But, Mrs. B., you do not consider that when the 
thousand additional loaves are eaten, the additional 
shillings will remain. 

342 ON MONEY. 

MRS. £. 

The greater part of these loaves will be eaten by 
those who will not only reproduce them, but pro- 
bably ncrease the number the following year. 


In that case it would be very possible that the 
progress of agriculture and manufactures should 
keep pace with, or even precede that of the mines. 

MRS. B. 

If the quantity of the precious metals annually 
extracted from the mines be exactly what is re- 
quired for the arts, and for the additional specie 
necessary to circulate the increasing produce of the 
land, there will be no change in the value of money, 
and commodities will continue to be bought and 
sold at their former prices. If less gold and silver 
be extracted than is requisite for these purposes, 
goods will fall in price ; and if, on the contrary, a 
greater quantity be produced, goods will rise in 
price, the fluctuations in the price of commodities 
gradually and constantly conforming to the varia- 
tions of the scale by which their value is measured. 

Dr. Adam Smith was of opinion that lor many 
years past the supply of gold and silver did not 
exceed the demand ; but several later writers con- 
ceive that he was mistaken on this point. I am 
very far from being a competent judge of such a 

ON MONEY. ^^43 

question, but I confess that 1 feel inclined to favour 
the opiivion of a general depreciation. 

Previous to the discovery of America the ex- 
changeable value of money was certainly much 
greater than It has been since that period. Some 
notion may be formed of the difference of the 
value of money in ancient and in modern times 
from the amount of the revenue which Xerxes, 
King of Persia, derived from l\is wealthy and ex- 
tensive empire, and which enabled him to maintain 
his mighty fleets and armies; it Is said in history 
to have amounted to only three millions sterUng. 


The prodigality and extravagance of the Romans 
was then in fact still greater than It appears, since 
the immense sums thoy expended upon luxuries 
were then more valuable than they would be at the 
present times. 

MRS. B. 

As the wealth of the Romans arose in a great 
measure from the spoliation of the countries they 
conquered, gold and silver formed an essential part 
of their plunder ; specie, therefore, might possibly 
l)e of less value there than in other parts of the 
world at the same period. 

Independently, however, of the increase of quan- 
tity which produces a depreciation in tlie value of 
the precious metals themselves, there aiv causes 
quite foreign to this, which have considerable eflcct 
(> 1 

344 ON MONEY. 

Oil the value ol the money into which they have 
been coined. One of these is the adulteration of 
the coin. A pound sterling, or twenty shillings, 
originally weighed a pound of silver ; hence its de- 
nomination. But sovereigns, in making new 
coinages, frequently found it convenient to adul- 
terate the metal by mixing it with alloy. It was a 
means of increacing the value of their treasures, by 
paying their debts with a much less quantity of the 
jirecious metals, and thus defrauding their creditor- 
subjects, who in the first instance were not aware 
of the change. 

In the year 1351, Edward the Fourth, distressed 
by the debts he had incurred in his chimerical at- 
tempts to conquer France, adopted this mode of 
paying his creditors with less money than he bor- 
rowed of them. He ordered a pound of silver to 
be coined into 26G, instead of 240 pennies. Having 
experienced the beneficial effects of this expedient, 
he soon after coined 270 pennies out of the same 
pound. By this imposition, not only the creditors 
of the crown, but all other creditors were defrauded 
of about a tenth of their property ; being compelled 
to receive in payment money of less value than that 
they had lent. Considerable inconvenience was 
also experienced from the alteration in the standard 
of value; as soon as it was discovered, it produced 
a general rise in the price of commodities, and the 
poor w^cre greatly distressed by the enhancement of 
prices of the necessaries of life. 

ON MONEY. 345 


But did not wages rise in the same proportion ? 

MRS. B. 

Eventually they did, no doubt ; but after sucli a 
revolution in prices as an event of this nature pro- 
duces, a length of time is required to restore the 
due level ; and the rich always resist the rise of 
wages as long as they can. In the instance I have 
mentioned it docs not appear that the labouring 
class made any effort to obtain a compensation by 
a rise of wages, until a dreadful pestilence, which 
originated in the east, extended its ravages to Eng- 
land, and carried off the greater part of the lower 
classes. Tlie survivors then took advantage of the 
scarcity of hands to raise their terms ; but the king, 
instead of allowing the remedy to pursue its natural 
course, considered this attempt of the labourers to 
raise their wages as an unwarrantable exaction ; 
and in order to prevent it, enacted the statute of 
labourers. This statute* ordained that labourers 
should receive no more than the wages which were 
paid previous to the adulteration of the coin. 

It would be diflicult to conceive a law more 
calculated to repress the effljrts of industry. But 
Edward, urged by the weight of his accumulated 
debts, continucil to depreciate the value ol the coin ; 
endeavouring to conceal the fraud by the introduc- 
tion of a new silver coin called a groat, but in value 

C 5 


only 3irf. : and in 1358 he made 'J 5 groats, or 300 
pennies, outof a pound of silver. 


What a prodigious depreciation in the course of 
so short a period of time ! and have similar expe- 
dients been resorted to by successive sovereigns ? 

MRS. B. 

Yes ; so repeatedly that 20 shillings, or a pound 
sterling, instead of containing, as formerly, a pound 
of silver, now weighs rather less than foui: ounces of 
that metal. 


But this is but a partial depreciation, which 
ftff'ects only the coin of Great Britain. Have 
other countries also adopted so unjust and perni- 
cious a measure ? 

MRS. B. 

It is so tempting an expedient for sovereigns, 
that it has been resorted to in almost all countries 
where money is used. In the time of Charlemagne 
the French livrc weighed a pound, of 12 ounces. 
Philip the First adulterated it with one-third of 
alloy. Philip of Valois practised the same fraud 
on gold coin, and it has been repeated by successive 
sovereigns till the depreciation of the French louis 
is even greater than thatof our pound sterling, and 
their livre is now worth not more than ten-pence. 


As far back as the time of the Romans this sur- 
reptitious motle of obtaining wealth had been (Jis- 
covered, and was practised. The llonmn as, which 
originidly contained a pound of brass, was in ttie 
course of time diminished to half an ounce. 


But now that the world must be fully aware of 
the im|K>sition, I should think that governments 
would not venture to have recourse to such ex- 

MRS. B. 

This country has increased so much in wealth, 
that in the present times less difiiculty is expe- 
rienced in raising taxes, and the facility of making 
loans has induced government to give the pryfer^- 
ence to that mode of obtaining money during a time 
of war, or whenever any remarkable expenses are 

Of late years a new inodc of augmenting the 
currency of the country hag been invented; by sub- 
stituting lor the precious metals a more convenient 
and more economical medium of exchange, under 
tlic form o{ jiapcr'Vioncy. 


Paper-money ! What value can there be in 
money made of paper ? 

o n 

348 ON MONEY. 

MRS. B. 

None whatever intrinsically, yet it lias been found 
to answer most of the purposes of specie. — You 
remember that money was first invented to avoid 
the inconvenience of barter. When a commodity 
is sold for money, it is under a confidence, on the 
part of the seller, that he will be able with the 
money to purchase any other commodity of equal 
value that he may want. It is of no consequence 
to him of Avhat material the money be made, pro- 
vided it have this quality. 


True ; but paper can never have that quality : 
who would part with any thing of value for a bit 
of paper ? 

MRS. B. 

Suppose I were to give you a paper containing 
iny promise to pay you 100/. in money whenever 
you demanded it ; would you not consider the pro- 
mise so formally given, nearly of the same value as 
the money itself ? 


Yes ; because I have perfect confidence in you ; 
but a stranger would not. 

MRS. B. 

Suppose that instead of my promise to pay you 
1 00/., I should give you a piece of paper contain- 

ON MONEY. 349 

ing a promise to the same effect of some of the 
weahhicst and best known merchants in London ? 


My confidence in the value of such paper would 
be in proportion to the reliance I could place on 
the promise of such merchants. 

MRS. B. 

Exactly so. Such confidence is the foundation 
of all banking establishments, which are in general 
a partnership of wealthy and respectable merchants, 
in whom the public repose so great a confidence 
that they are willing to take their promissory note, 
commonly called a bank-note, instead of money. 


A bank-note then is a written engagement, or 
promise, to pay the sum, whatever it be, that is 
specified in the note ? 

MRS. B. 

It is; and these notes become current as a me- 
dium of exchange; having no intrinsic value, they 
are merely the sign or representative of wealth ; 
but are received by the public under the persuasion 
that they will be paid in money by the bank when- 
ever required. 


This is indeed an excellent invention ; what a 

350 ON MONEY. 

saving of expense ! The establishment of a bank 
of paper-money appears to me very simihir to tl>e 
discover^' of a mine of gold in the country: or in- 
deed the bank has even some advantages over the 
mine, for it is certain of being productive, and yet 
it is attended with much less expense. Is the in- 
vention of paper-money quite of modern date ? 

MRS. B. 

There is, I believe, no vestige of any thing of 
the kind in ancient history; unless we should con- 
sider, as such, a species of stamped leather used as 
money by the Carthaginians ; and as they had also 
coined money, it is possible that their stamped lea- 
ther might be considered merely as a sign or repre- 
sentative of real value, analogous to our paper- 


ITic leather was probably a species of parchment, 
the substance commonly used for writing on, be- 
fore the invention of paper, and the impression 
stamped on it might signify the sum of money 
which the piece of leather was to represent, or pass 

MRS. B. 

Tliese arc points upon which, in the imperfect 
state of our knowledge of Carthaginian currency, 
it would be diflicult to determine; it is fortunate, 
therefore, that they are questions more of curiosity 
than of utility. 


ON ivro>rSY. 351 

The first bank we are cIi^;tillctly acquainted with 
was cstabhshed at Amsterdam iii the year 1 60'J * ; 
but this institution was rather of a different kind 
from what I have been dcscribijig. It issued no 
pajjor, but received the deposit ot" coined money, 
an account of which was taken in the books of the 
bunk ; and through the medium of these books, 
transfers of property were made from one inchvidual 
to another, as occasion required, without the money 
being once removed from the stronjj chests in whicli 
it was originally deposited. 


There does not «eem to be any economy In this 
species of bank ; whilst those that issue bank-notes, 
by the substitution of a cheap circulating medium, 
render that of gold and silver superfluous, and enable 
it to be sent abroad to purchase foreign commodities. 

MR^. B. 
And, should foreign countries adopt the same 
economical expedient, and send us their super- 
fluous specie ? 


True, I did not consider that. If paper mo- 
ney were generally adopted, every coinitry would 
be overstocked with specie; for though the cstab- 

♦ It is said, liowcvcr, tliat a bank, was established at 
Tcnicc at least two centuries bcibrc. 

252 ON MONEY. 

lislimcnt of a bank in any one country may force 
the superfluous money into otliers, this cannot hap- 
pen if banks are set up in eveiy country. They 
are far therefore from being attended with the 
advantages I at first imagined. 

MRS. B. 

By issuing paper-money, so much is, in fact, added 
to the circulation tliroughout tlie civiHsed world ; 
and inasmuch as it supersedes the use of the precious 
metals, and therefore lessens the demand, it must 
to a certain degree lessen their value. The im- 
mediate effect of opening a new bank is certainly to 
drive some portion of the specie out of the coun- 
try ill which the bank is established. It does not, 
however, force out the whole quantity which the 
paper represents, for independently of the general 
excess to which we have alluded, a bank must keep 
a certain quantity of specie in reserve to be enabled 
to fulfil the promise of paying its notes on demand. 


You do not mean to say that a bank will keep a 
fund of ii^pccic, like that of Amsterdam, equal to 
the value of its notes, for that purpose; for if so, 
no saving would result from the use of paper- 
money ? 

MRS. B. 

Certainly not. The profits of the bank arise 
from the employment of the capital thus saved, 

ON MONEY. 'irtA 

which consists of the difTcrcnce between tiie amount 
of notes issued and tiie specie reserved in the bank. 
It is so impfobable that every person possessctl of 
notes should apply at once for payment, that there 
is no necessity for providing a fund equal to the 
amount of the notes in circulation in order to fulfil 
the engagement. Banks discover from experience 
what is the proportion of specie rctjuisite to enable 
them to answer the average demand made upon 
them; and they regulate the quantity of notes they 
issue accordingly : for if they failed in their engage- 
ment to pay them in cash on demand, they would 
become bankrupt. 


Yet I understand that the Bank of England no 
longer pays its notes in specie ? 

MRS. B. 

Tliat is true; but it is owing to an act of parlia- 
ment liaving been passed* purposely to grant this 
privilege to the Bank of Eiiglaud ibr a specified 


And if a Bank of Eufjlaiul note can no louijer be 
exchanged at pleasure for specie, in what does its 
value consist ? 


In the expectation that it will one day be paid 
in specie: this opinion renders b;iiik-nolcs still 
current: were such confidence deslroved, their 

354 ON MOKEY. 

value would be redurced to that of the papcv of 
which tliey are made. 


But since the Bank of England is not obliged to 
pay its notes in cash, it is at liberty to issue any 
quantity however great. In short it seems to have 
discovered the philosopher's stone, for though it 
may not have found the means of making gold, it 
possesses a substitute which answers the purpose 
equally well. 

MRS. B. 

Excepting that, having no intrinsic value, it 
cannot be exported in case of excess ; and j'ou may 
recollect our observing, that no use could be made 
of any superfluous quantity of money but to ex- 
diange it for foreign goods. An excess of currency 
produced by an over issue of bank-notes must 
therefore remain in the country, and cause a de- 
preciation in the value of money, which would be 
discovered by a general rise in the prices of com- 
modities, and would be attended with all the evils 
eniin\erated in our last conversation. 


And is there not great danger of a bank issuing 
an excess of notes when it is not restricted by the 
obligation of paying them in specie ? 

ON MONEY. 355 

MRS. B. 

A very considerable risk is certainly incurred by 
such an exomption. 

When a bank issues more notes tlyin are required 
for the purpose of circulation, its effect in depre- 
ciating the value of the currency, and raising the 
price of commodities, is at first very trifling, because 
as soon as that effect is perceived, the coined 
money begins to disappear. Notwithstanding the 
prohibition of law, it never fails to make its escape 
out of the country. It is either clandestinely sent 
abroad, or privately melted, and exported in 
bullion. As long therefore as an over-issue of 
notes serves to replace the coin which it forces out 
of the country, there is but little augmentation of 
the circulating currency ; but if after the specie has 
disappeared, the bank still continue to force an 
additional quantity of notes into circulation, the 
excess will be absorbed in it, the value of the cur- 
rency will be proportionally depreciated, and will 
produce a corresponding rise in the price of com- 


But Is it known whether the Bank of Enfrland 


has materially increased its issue of notes since it 
has been exonerated from the obligation of payin"- 
them in cash ? 

MRS. B. 

Of that there is no doubt; but it is the opinion 

356 ON MONEY. 

of many people that the supply of notes has not 
exceeded the demand ; — that the paper-mine (as 
you call it) has increased its produce only in pro- 
portion to the increase of the produce of the 
country, and the peculiar exigencies of the times, 
political circumstances having deranged the natural 
order of things, and rendered, during the late re- 
volutions of Europe, a more than usual quantity of 
currency necessary. 


But was it not during the late war that all our 
gold coin disappeared, and was supposed to be 
melted down or exported ? And was there not a 
general rise in the price of provisions and all com- 
modities at the same period ? 

MRS. B. 

That is true ; and the question is very much dis- 
puted whether these circumstances were owing to 
the war, and the taxes it entailed upon us, or to 
an over-issue of bank-notes. England was under 
the necessity of paying her troops on the Continent, 
and of subsidising foreign sovereigns ; this, some 
people are of opinion, was a sufficient reason to 
account for the disappearance of our specie, and to 
render an additional issue of bank-notes necessary. 
Then the rise in the price of provisions they attri- 
buted to the difficulty of importing foreign agricul- 
tural produce, which naturally raises the price of 

ON MONEY. 357 

the home supply. Foreign commodities also be- 
came dear from their scarcity, and this enhanced 
the price of such goods as would serve as a substi- 
tute for them at home. 


And commodities of English manufacture, so far 
from rising in price, were, I recollect, much cheaper 
during the last war. Now if the currency were 
depreciated, it should produce a general rise in the 
price of all commodities. I begin therefore to 
think that the bank may not have issued more 
notes than were required. 

MRS. B. 

The rise of price produced by a depreciation of 
the value of money is general, but not universal ; 
for other circumstances may not only counter- 
balance the effect of the depreciation of currency, in 
regard to particular commodities, but even render 
them cheaper notwithstanding. You must recollect 
that there are other causes which affect the price of 


True, the proportion of the supply to the de- 
mand ; but we have just been observing, that during 
a war there is a deficiency of supply, which in- 
creases instead of counteracting the effect of the 
depreciation of currency, a:? it would niake commo- 
dities still dearer. 

358 ON MONEY. 

MRS. r. 
During a war there is generally a deficiency of 
foreign commodities, and there may also be of 
agricultural produce for our own consumption ; 
but of English manufactures intended for export- 
ation, there must, as we have before observed, be a 
redundancy, owing to the difficulty of expoiting 
them. Supposing, therefore, that a depreciation 
of the value of money should produce a general 
rise in the value of commodities of 1 per cent., 
whilst on the other hand the excess of the supply 
occasioned a reduction of value of English manu- 
factures of 20 per cent., at what rate would such 
goods sell? 


Ten per cent, must be added on account of the 
depreciation of money, and 20 per cent, deducted 
on account of the excess of supply ; the goods w ould 
therefore sell 10 per cent, lower than before. The 
cheapness of our own manufactures, then, affords 
no proof against a depreciation of the currency. 
This makes me again waver in my opinion, Mrs. B., 
and I feel at a loss which side of the question to 

MRS. B. 

The strongest argument in favour of a depreci- 
ation of the currency is, that guineas no longer 
passed for the same value as gold bullion, which is 
the natural standard of the value of coined money. 

ON MONEY. 359 


Was the gold then adulterated, and an ouncQ of 
gold coined into more than 3/. IJi'. I0\d. r 

jMRS. b. 
No ; but gold bullion partook of the general 
rise of commodities, and instead of selling for 
3/. 17^. lOjd. it sold for four, and even once as 
high as 51. an ounce. 


But why did not guineas rise in the same pro»» 
portion ? I cannot conceive how they can be less 
valuable than a similar weight of the gold of which 
they are made. 

MRS. B. 

The coined and the uncoined gold remain in 
reality of the same value, but as it is not lawful for 
a guinea to pass for more than a pound-note and a 
shilling, the guineas are compelled to share the 
fate of the paper-currency ; and if that be depreci- 
ated, all the coined money of the couatry, whether 
gold or silver, must be so likewise. 

Then, if it were not illegal, every one mouIiI 
melt his depreciated guineas and shillings, and con- 
vert them into gold and silver bulh'on ? 

3f)0 ON MONEY. 

MRS. U. 

Certainly. It is this which causes our specie to 
disappear, and transports it to foreign countries, 
where it is freed from the shackles of a depreciated 
paper-currency, and enabled to fetch its real value 
in exchange for goods ; it is this also which, as we 
before observed, brings foreign goods to be sold at 
our market, because it is dear ; and sends our money 
to purchase goods at foreign markets, because they 
are cheap. 


But if an ounce of gold rises in price from 
31. 17 s. lO^d. to 5/., is it not rather the value of the 
bullion that has risen than the currency that has 
fallen ? 

MRS. B. 

Gold bullion, like every other commodity, rises 
in price only, not in value ,- and that rise is owing 
to the depreciation of the currency in which its 
price is estimated ; were there no depreciation, bul- 
lion and guineas would both be worth 3/. 1 7^. lOjU. 
an ounce. 


Thi?, then, I think seems to decide the point of 

MRS. B. 

You must recollect that when I undertook to 
assist you in acquiring a knowledge of the prin- 
ciples of political economy, we agreed to confine 


our enquiries to such points as were well esta- 
blished. We cannot, therefore, venture to decide 
iij)on questions which are yet in dispute. 

It is very easy to acquire some knowledge of the 
principles of a science, but extremely difficult to 
know how to apply them. I would particularly 
caution you against hasty conclusions or inferences; 
the erroi*s arising from the misapplication of sound 
])rinciples are scarcely less dangerous than those 
that proceed from total ignorance. 

Let us now conclude our observations on cur- 
rency, which wc may henceforth consider as con- 
sisting not merely of specie, but of coined and of 
} taper- money. 


Pray is it necessary that the value of the cur- 
rency of a country should be equal to the value of 
the commodities to be circulated by it ? 

MRS. B. 

By no means. The same guinea or hank-note 
vill serve the purposr of transferring liom one iii- 
■dividual to another several hundred jjounds worth 
of goods in the course ola short time. There arc 
besides many expedients for economising money, 
the most remarkable of which is an arrangement 
made amongst bankers. Their clerks meet every 
day after the hours of business to exchange the 
draughts made on eaeji other for the preceding day. 


If, ior instance, the banking-house A. has drauglitfe 
to tlie amount of 20,000/. on the banking-house 
B., the latter has also, in all probability, draughts 
upon the former, though they may not be to tlie 
same amount ; the two houses exchange these 
draughts as far as they will balance each other, and 
are thus prevented the necessity of providing money 
for the payment of the whole. By this economical 
expedient, which is carried on amongst all the 
bankers in London east of St. Paul's, I understand 
that about 200,000/. performs the function of four 
or five millions. 


And what do you suppose to be the proportion 
of the money to the value of the commodities to 
be circulated by it ? 

MRS. a. 
That, I believe, it would be impossible to ascer- 
tain. Mr. Sismondi, in his valuable Treatise on 
Commercial Wealth, compares these respective 
quantities to mechanical powers, which, though of 
different weights, balance each other from the 
equality of their momentum ; and, to follow up the 
comparison, he observes that though commodities 
are by far the most considerable in quantity, y( t 
that the velocity with which currency circulates 
compensates for its deficiency. 



This is an extremely ingenious comparison, and 
1 should suppose the analogy to be perfectly cor- 
rect; for the less money there i^ in circulation the 
more frequently it will be transferred from one to 
another in exchange for goods. 

MRS. B. 

Perfectly correct is rather too strong a term. 
The analogy will only bear to a certain extent, 
otherwise, whatever were the proportions of cur- 
rency and of commodities, they would always ba- 
lance each other, and the price of commodities 
would never be affected by the increase or diminu- 
tion of the quantity of currency. 

R 2 










MRS. B. 

We mentioned commerce as one of the modes 
of employing capital to produce a revenue ; but 
deferred investigating its effects until you had ac- 
(juired some knowledge of the nature and use of 
money. We may now, tlierefore, proceed to cxa 



mine in what manner commerce enriches indivi- 
duals, and augments the wealth of a country. 

Those who engage their capitals in commerce or 
trade act as agents or middle-men between the pro- 
ducers and the consumers of the fruits of the earth ; 
they purchase them of the former, and sell them to 
the latter; and it is by the profits on the sale that 
capital so employed yields a revenue. 

There are two distinct sets of men engaged in 
trade : — merchants, who purchase commodities 
(either in a rude or a manufactured state) of those 
■who produce them, — this is called wholesale trade; 
and shopkeepers, who purchase goods in smaller 
quantities of the merchants, and distribute them to 
the public according to the demand, — this consti- 
tutes the retail trade. 


Trade will no doubt bring a revenue to those 
who employ their capital in it ; but I do not con- 
ceive how it contributes to the wealth of the 
country : for neither merchants nor shopkeepers 
produce any thing new; they add nothing to the 
general stock of wealth, but merely distribute that 
which is {)roduccd by others. It is true, that 
mercantile men form a considerable part of the 
community ; but if their profits are taken out of 
the pockets of their countrymen, they may make 
lorlnnes without enriching their country. 


MRS. B. 

Trade increases the wealth of a nation, not bj 
raising produce, like agriculture, nor by working 
up raw materials, like manufactures; but it gives 
an additional value to commodities by bringing 
them from places where they are plentiful to those 
where they are scarce ; and by providing the means 
of a more extended distribution of commodities, it 
gives a spur to the industry both of the agricul- 
tural and manufacturing classes. 


Do you mean to say that the merchant and 
trftdesmen encourage farmers and manufacturers to 
Increase their productions, by finding purchasers 
for them ? 

MRS. B. 

Yes. It would be impossible, you know, for 
every town or district to produce the several kinds 
of commodities required for its consumption ; dif- 
ferent soils and climates, and various species of skill 
and industry are requisite for that purpose. Some 
lands are best calculated for corn, others for pas- 
ture ; some towns are celebrated by their cotton 
manufactures, others for their woollen cloths. Every 
place has, therefore, an excess of some kind of 
commodities and a deficiency of others; which 
renders a system of exchanges necessary, not only 
between individuals (as we observed in treating of 


ihe origin ol barter), but between towns and coun- 
tries to the most distant regions of the earth. 

Now it is the business of merchants to exchange 
the surpUis produce of one place for that of an- 
other. A man who deals in any particular com- 
modity makes it his business to find out in what 
parts that commodity is most abundant, and will 
be sold at the lowest price ; and in what parts it is 
most scarce, and will fetch the highest price, and 
then to ascertain the least expensive mode of con- 
veying it from the one to the other market. 


In this they consult their own interest; since 
to purchase at the cheapest and sell at the dearest 
market will give them the greatest profits. 

MRS. B. 

No doubt; but it is wisely and beneficially or- 
dained, that by consulting their own interest they 
are at the same time favouring that of the com- 
munity. When merchants hasten to send their 
goods to a market where they will sell at a high 
price, they supply those who are in want of such 
goods : the higher the price, the more urgent is 
the demand ; it is a deficiency that has rendered 
them dear, and by furnishing the market with an 
ample supply, merchants not only satisfy the wants 

B 4 


of the purchasers, but ultimately lower the price of 
the commodity. 

Do you think that manufacturers would be able 
to dispose of an equal quantity of goods without 
the intervention of mercantile men ? In such a case 
Manchester would be reduced to distribute its cot- 
tons merely within its own precincts and environs, 
instead of supplying, as it now does, not only the 
demand of all England, but even that of the ruost 
iemote provinces of America. 

Trade encourages industry, in the second place^ 
by rendering commodities cheaper. The merchant, 
by dealing in large quantities, is enabled to bring 
goods to market at a less expense of conveyance, 
and can therefore afford to sell them on lower 
terms than if the consumer were obliged to send for 
them to the places where they are produced* 


Yet things may gerrerally be bought at the lowest 
price where they arc produced or manufactured ? 

MRS. B. 

True; but if you add the charges of a private 
conveyance, they will cost you much dearer. Had 
we no means of procuring coals, than by sending 
a waggon to Newcastle, though we should pay less 
for them there than in London, they would, from 
the expense ol carriage, cost us more. Merchants 


uho deal in large quantities liave a regular system 
of conveyance for their goods, which considerably 
diminishes the charges. The coals are by them 
transported in ships to the different sea-ports, and 
thence conveyed in barges to the inland parts of the 
country wherever water-carriage is practicable. 


It would, to be sure, not only be very expensive, 
but extremely inconvenient, were we obliged to 
send to distant parts for the commodities they pro- 
duce. If, for instance, it were necessary to send 
to ShefTicld to purchase a set of knives and forks; 
to Leeds for a coat, and to Norwich for a shawl ; — 
or, without going so far, were it requisite to send 
into the country for corn, meat, hay, in short, every 
thing which the country produces, these things 
would cost us much more than if we bought them 
of shopkeepers. 

But admitting that trade, by facilitating the dis- 
tribution of commodities, promotes their consump- 
tion, I cannot undcrsUind how that can conduce to 
the wealth of a country : it increases its comforts 
and enjoyments, but it seems to me to encourage 
expenditure rather than production. 

MRS. B. 

I'o increase the comforts and cnjovments of a 
country is the ultimate aim of national wealth; and 
R 5 


whilst trade promotes consumption, by rendering 
commodities cheaper, it does not engender prodi- 
gality in the consumer, but encourages industry in 
the producer, to augment the supply. A reduc- 
tion of price brings a commodity within the reach 
of a greater number of persons, which increases the 
demand for it ; the man who could afford to wear 
only a linen frock, will, when commodities are 
cheaper, be able to wear a coat. He who could 
allow himself but one coat in the year, can now 
without extravagance wear two. 

This increasing demand for commodities spurs 
the industry of the farmer and manufacturer, and 
they enrich themselves by furnishing the requisite 
supplies. With their wealth thefr consumption 
also augments ; for the wants of men increase with 
their means of satisfying them ; and when they add 
to their income, they usually add also to their ex- 
penditure. The farmer has more to satisfy the 
dcvsires of the manufacturer; and the manufacturer 
produces more to supply the demands of the farmer : 
so that each is enabled to give and receive a greater 
quantity of things in exchange. These exchanges, 
it is true, are made through the agency of mer- 
chants, and by the means of money, but they are 
effectually exchanges of commodities, as really as 
it the manufacturer supplied the farmer with cloth- 
ing in exchange for provisions. The increase of 
saleable commodities affects in a similar manner all 


classes of people. The proprietor of land improves 
his fortune by the increasinjT value of his rents, 
which the prosperous state of agriculture enables 
the farmer to pay ; and the labourer betters his con- 
dition by the rise in the rate of wages resulting from 
the increased demand for labour. The whole may 
be summed up by saying, that, the quantity of 
commodities being increased, a larger portion will 
fall to the lot of every consumer who has any share 
in their production. 


I now bemn to understand the general advon- 
tages resulting from commerce. The retail trade 
carried on by shopkeepers must be attended with 
the same happy effects. It would be extremely in- 
convenient to the rich, and impracticable for the 
poor, to purchase the commodities they wanted in 
such large quantities as are disposed of by mer- 
chants and wholesale dealers. Were there no such 
trade as a butcher, for instance, every family 
would be obliged to purchase a whole sheep or a 
whole ox of the farmer. 

MRS. B. 

Retail trade is one of the most useful subdivisions 
of labour. Nothing can be moie dcbirable than 
that the poor, who arc maintained by daily or 
R 6 


weekly wages, should be able to purchase their 
provisions in as small quantities as possible. 


Yet r have often regretted the high price whiclt 
the lower orders of people are obliged to pay for 
fuel, candles, grocery, and various little articles 
with which they are supplied by the chandlers' 
shops ; whilst the higher ranks, who can afford to> 
purchase the same goods in larger quantities, ob- 
tain them of more extensive dealers, at a cheaper 

MRS. B. 

You must consider that were there no small 
shopkeepers, the lower classes would be reduced to 
the utmost distress ; and th^se petty dealers cannot 
afford to sell their pennyworths, without being paid 
for the additional labour and trouble such kind of 
traffic requires. Their profits cannot be exorbi- 
tant, otherwise competition would in time reduce 

them to their natural standard. 


But by selling very small quantities at a higher 
price, they must make more than the usual rate of 
profit ; and how do you reconcile this to the com- 
mon level of profit in all employment of capital ? 

MRS. B. 

By reckoning whatever gains they make above 
ihe usual profits of capital, as iscages, that is to say. 


the reward of their personal labour. The smaller 
is the capital which a man employs, the greater is 
the proportion which his wages will bear to the 
profits of his capital. A man who sells oranges in 
the streets has laid out perhaps a capital of 20 or 
30 shillings on the goods in which he deals, the 
usual profits of trade on such a sum is two or three 
shillings a year ; but if he did not carry about 
oranges for sale, he would work as a labourer, and 
get perhaps two shillings a day wages ; these two 
shillings a day, or 62G shillings a-year, the man 
must make by the sale of his oranges, in addition 
to the usual profits of trade ; the whole of his gains 
go however under the name of profits, because the 
dlstinctioQ can be made only in theory, 


But all tradesmen and mercantile men devote 
their time and attention to their business : should 
not, therefore, a portion of their gains be con- 
sidered as the reward of their personal labour, 
which must be valuable in proportion to the ex- 
tent and importance of the concern in which they 
are engaged. 

MRS. B. 

No doubt; yet it will bear but a small pro- 
portion to their profits, compared with that of 
petty dealers. A merchant who makes in trade an 
income of 5000/. a-year, were lie to engage himself 


as clerk, would probably not obtain a salary of 
above 500/. ; his wages would therefore be equal to 
only one-tenth of his profits, whilst those of the 
man who sold oranges would be above 200 times 
the amount of the profits of his capital. 

Another advantage resulting to the farmer and 
manufacturer, from the disposal of their goods to 
merchants, is the quick return of the capital they 
have employed in their production ; for they receive 
the price of their goods from the merchant much 
sooner than they would, were they obliged to col- 
lect it gradually from the consumers. 

Let us suppose a cotton-manufacturer who de- 
votes a capital of a thousand pounds to the employ- 
ment of as many labourers as it will maintain, and 
sells their work to a wholesale dealer for 1 J 00/. 
With this money he immediately sets his men 
and his mills to work again ; whilst, if he retailed 
the goods himself, though instead of 1100/. he 
might perhaps get 1200/. or even 1300/. for them ; 
yet, as the money would come in very slowly, he 
and his workmen would necessarily be kept a long 
time out of employ. 


To the farmer such delays would prove ruinous, 
if he could not sell his crops in time to proceed 
with the necessary cultivation of the farm for the 
ensuing season. 


MRS. B. 

In order to .ivoid such extremities, both the 
farmer and manufacturer would be obliged to 
divide their capital into two parts, and employ the 
one in raising or manufacturing commodities, and 
the other in disposing of them. To the occupations 
of agriculture or nianuflictures, they would find it 
necessary to add that of trade, a complication which 
would be equally injurious to each of the concerns. 
Commerce is one of the economical divisions of 
labour; if it sets apart a certain number of men, 
for the purpose of circulating and distributing the 
produce of the earth, it is in order that those who 
are engagetl in raising and manufacturing that pro- 
duce should be able to devote the whole of their 
capital, their time, and their talents, to their re- 
spective employments. It is worthy of observation, 
too, that none of these divisions are enforced by 
law, but exist under the choice of the parties, and 
have been adopted from a view to their general 

But although it is advantageous to separate 
commerce from other branches of industry, it is 
desirable that its operations should be facilitated as 
much iis possible, both in order that the agricul- 
ture and manufactures should not be deprived of 
too many labourers, and that commodities should 
be brought to market with the least possible ex- 


peiise. Good and numerous roads and navigable 
canals are extremely conducive to this end, as they 
enable the produce of the country to be conveyed 
with ease and expedition to the several markets ; 
for ease and expedition economise time and labour^ 
and economy of time and labour is productive of 


Were there no roads, the farmer being without 
means of sending his crops to market would not 
produce more than could be consumed by his 
family, and perhaps some few customers in his 
neighbourhood, and he must be content to clothe 
himself with the fleecds of his flocks and the skins 
of his herds, for he would be unable to procure 
manufactured articles. Nor would the manufac- 
turers be better off, as the market for the disposal 
of their goods would be ecjually limited. 

MRS. B. 
Neither towns nor manufactures could exist in 
such a state of things, because they could not be 
supplied with the produce of the country, which is 
still more necessary to their existence, than the 
workmansliip of the towns is to the farmer. It is 
the surplus produce of the country wiiich pays for 
the workmanship of the towns, and the surplus 
vvorkraanship of the towns that pays for the pro- 


iluce of the country. The greater, therefore, the 
intercourse between town and country, the greater 
is the encouragement given to the industry of 

History teaches us that in all old settled coun- 
tries no material improvement has taken place in 
the cultivation of the lands without a considerable 
advance in the state of manufactures and commerce ; 
and Adam Smith even goes so far as to say, that 
" through the greater part of Europe the com- 
" raerce and manufactures of cities, instead of 
" being the effect, have been the cause and oc- 
" casion of the improvement and cultivation of the 
*' country." 

But as the forms of governments, and the man- 
ners and customs o( our barbarous ancestors, have 
constantly interfered with and restricted the pro- 
gress of wealth and civilisation of Europe, tiic 
natural order of things has frcnjuently been re- 
versed, and towns have arisen, not from the surplus 
wealth of the country, but as citadels and fortresses 
in which the people found shelter from the oppres- 
sion of their superiors, and the incursions of their 
warlike neighbours. We must look to America 
for tiie natural cfTect of the progress of wealth and 
civilisation, and we shall there behold the habita- 
tions of farmers scattered over the face of the 
country, and town*^ built only after cultivation wa^ 
far advanced. 



In expatiating on the advantages of facility ot 
conveyance, it must not, however, be forgotten, 
that the land whicli is converted into roads is taken 
from tillage ; and could we calculate the quantity of 
corn and hay which the roads, in a state of culture, 
jnight have produced, it would perhaps be found 
that some of thorn have occasioned more loss than 

To take land from cultivation for the purpose of 
roads appears to mc very analogous to taking la- 
bourers from agriculture for the purpose of trade. 

' MRS. B. 

The result is in both cases similar ; for there can 
be no doubt but that the general effect of roads 
and canals is to increase the produce of the country. 
If we arc indebted to merchants for the advantages 
of trade, roads and canals are the instruments with 
which they carry it on. Deprived of such means, 
liieir operations would be very circumscribed ; there 
would be no trade but at sea-ports, and along the 
course of rivers. 

The charges of conveyance from Liverpool to 
Manchester on the Duke of Bridgewater's canal is 
six shillings a ton, whilst the price of land-carriage 
i-. forty shillings. 


It there had been a river from one of thor*? 


towns to ilie other the expense of carriaj^e would 
have been stili less tlian that of ^he canal. 

MRS. B. 

1 beg your pardon ; a river is seldom uniformly 
navigable, and is always more or less circuitous in 
its course; and where the stream is powerful, it will 
admit of navigation only in one direction, as is the 
case in some of the American rivers. Before the 
Bridgewatcr canal was dug, the usual mode of con- 
veyance of goods was along the Mersea and the 
Trevcll, and the cost was twelve shillings a ton, just 
double that of conveyance on the canal. Macpher- 
son observes, that " this spirited and patriotic en- 
" terprisc of the Duke of Bridgewater is rewarded 
*» by a vast revenue, arising from his water-carriage 
" and his formerly useless coal-mine; and the sur- 
*' rounding country is benefited a pound at least in 
** every shilling paid to the Duke." 


This reminds me of a circumstance that occurr( d 
during a tour in Wales ; we were adiniring a neat 
fountain which oupplied a village with water, and 
were informed by the landlord of the inn, that he 
had constructed it, and had had the water conveyed 
from a distant spring, whence the people of the 
village had formerly been under the nece!.sity of 
itiching it. A trifling sum was annually i)aid by 


each family lor liberty to use this water, and the 
landlord thought it necessary to make many apo- 
logies for not allowing it them free of expense, and 
talked much of the money he had laid out in the 
enterprise. My father assured him that lie was 
convinced the s{K?culation was still more beneficial 
to the village than it was to himself; that as the 
inhabitants had the option of fetching water for 
themselves, the payment proved that it was because 
they could turn the time and labour they bestowed 
on the conveyance of water to better account ; and 
upon enquiry we found the village had been in an 
improving state ever since the erection of this foun- 
tain. It had not only become more opulent, but had 
acquired habits of cleanliness, which had proved 
very beneficial to the health of the people. 

MRS. B. 

There are three species of commerce in v.hich 
merchants engage their capitals. The home trade^ 
foreign trade, and the carrying trade. 

The home trade comprehends all the internal 
and coasting trade of a country. The foreign trade 
is that in which we exchange our commodities for 
those of foreign countries ; and the carrying trade 
consists in conve}'ing the commodities of one fo- 
reign country to another. Let us at present con-^ 
fine our observations to the home trade. 



The home trade, I conclude, must be the most 
advantiigeous to the country, because it encourages 
the industry ot our own people. 

MRS. B. 

But what difference can it make whether our la- 
bourci-s are em})loyed to work for us, or for fo- 
reigners? For if we export EngHsh goods, we 
receive an equal amount of foreign goods in ex- 
change ; so that foreign labourers work equally for 
us in return. 

The only advantage of the home trade is that it 
usually affords a quicker return of capital, which 
is a further means of promoting industry. The 
nearer is the market at which the merchant disposes 
of hiu goods, the sooner will his capital be re- 
turned to him, and the sooner will he be able to 
take other goods from the hands of the farmer or 
manufacturer. If a London merchant trades with 
Sheffield or Manchester, his capital may be re- 
turned to him in the course of a few weeks; if witii 
America or the East-Indies, it may be a year or 
two, or more, before he gets it back. The greater 
the vicinity of the market, therefore, the greater 
the number of sales and purchases he will be able 
to make in a given time. A capital of 1000/., for 
instance, might in the home trade be returned 
once a-month, and enable the merchant, dining 

38'2 ON COMMEIlce. 

the course of the year, to purchase 1 2,000/. worll» 
of goods; whilst, if he sent his merchandise to 
India, two years would probably elapse before he 
got his capital returned. In the first case, there- 
fore, the 1000/. capital would afford 24 times 
more encouragement to industry than it would in 
the latter. 


You do not thence mean to infer, that in the first 
case the profits would be twenty-four times greater ? 

MRS. B. 

Certainly not. Competition is, you know, per- 
petually tending to equalise the profits of capital, 
in whatever way it is employed. Profits will con- 
sequently be proportioned to the slow return of 
capital ; and must, therefore, be reckoned annually, 
and not calculated upon every time the capital is 


The period of the return of capital applies, then, 
not so much to the home or foreign trade, as to 
the distance of the market; for capital might be 
returned quicker in trading with Calais or Dunkirk 
than with Edinburgh and Cork ? 

MRS. B. 

It is very true ; and how nmch it is to be re- 
gretted that jealousies and dissensions should so 


rrc(|U('ntly impede and restrict the trade between 
ni'ighbouring nations, which wcnild otlierwise be 
carried on with such great and reciprocal advantage I 
But we sliall reserve till our next interview the ob- 
servations we have to make on foreign trade. 










At our last interview, Mrs. B., you were regret- 
ting that any restraint should be imposed on our 
trade with foreign countries ; yet I cannot help 
thinking that every measure tending to discourage 
foreign commerce, and promote our own industry, 
would be extremely useful. 

MRS. B. 
You would iind it difficult to accomplish both 
those objects ; for in order to encourage our own 
industry we must facilitate the means of selling the 


produce of our manufactures, and extend their 
market as much as possible. On the other hand, 
if we prohibit exportation, we limit the production 
of our manufactures to the supply which can be 
consumed at home. If the woollen manufacturers 
of Leeds, after having supplied the whole demand 
of England for broad cloths, have any capital 
left, they \vill use it in the preparation of woollen 
goods for exportation. 


Why not rather employ it in the fabrication 
of other commodities which may be consumed at 
home ? 

MRS. B. 

If there were a deficiency of capital in any other 
bianch of industry at home, the redundancy would 
naturally be drawn to that branch ; but if all the 
tl'ade, that is, all the exchanges that could be made 
at home, have been made, we send the residue of 
our commodities to foreign markets for sale. 


Yet it appear? a great hardship on the poor to 
send goods abroad, which so many of them are in 
want of at home. 

Mils. i;. 

The poor are lirst sujiplieil with whatever they 
can afford to purchase: and without tiic means of 


purchase you must recollect that there can be no 
effectual demand. It is not to be expected that 
farmers and manufacturers should labour for them 
merely from charitable motives, and were they so 
disposed, they would not long possess the means of 
continuing their benevolence. It would be very 
wrong, therefore, to consider this surplus produce 
as taken from the poor ; for it would not have been 
produced had there been no demand for it in fo- 
reign countries. 


That is very true. In all employment of capital 
men labour with a view to profit ; they work, there- 
fore, only for those who will pay them the value of 
their produce. And it is easy to conceive that those 
who have no further want of English commodities 
may yet wish to procure foreign goods. The Eng- 
lish merchant will therefore say, " Since there is no 
more demand for the goods I deal in, I will export 
the remainder, which will be purchased abroad, and 
I shall get foreign commodities in exchange; — 
though my countrymen do not require any more 
cotton goods, I know that they will purchase wines, 
coffee, sugar, &c." 

MRS. B. 

Vei'y well. Let us examine now what would 
be the effect of confining the employment of 


commercial capital to the lionic trade. If the 
inhabitants of the West-Indian islands, Jamaica, 
for instance, were to prohibit tlie exportation of 
coffee and sugar, and the planters were obliged to 
trade only within the island, the consequence 
would be, that the demand for coffee and sugar 
would be very insignificant, and that an incon- 
siderable part only of the capital of the colony 
would find employment. The same effect would 
take place in Russia, if foreign merchants were not 
allowed to purchase the hemp and flax so abund- 
antly produced in that countxy. If in Peru and 
Chili the exportation of indigo, bark, and other 
drugs was prohibited, the Europcan.s, who pur- 
chase them, would not be the only sufferers; the 
Americans would be impoverished for want of em- 
ployment for their capital. 


All this is very clear, I admit. But what security 
have we that merchants will not employ their ca- 
pital in foi'eign commerce, before the demand for 
it in the home trade is fully supplied ? 

MRS. B. 

That security is derived from the natural distri- 
bution of capital according to the rate of profit. If 
foreign commerce employed more capital than the 
country could spare, the demand for it at home 

s 2 

388 ON rORLIGN TilADr.. 

would raise the profits of the home trade, and the 
temptation of these increased profits would soon 
restore that portion of capital which had been un- 
necessarily withdrawn from it. 


The rate of profit, then, affords an excelleut cri- 
terion of the employment of capital most advan- 
tageous to the community. When foreign com- 
merce offers greater profits than the home trade, 
it proves that there is a greater demand for capital 
in that branch of industry? 

MRS. B. 

Yes ; it proves that the country possesses a sur- 
plus quantity of produce either agricultural or 
manufactured, which cannot be disposed of in the 
home market ; and if the owners of this surplus 
were prevented from exchanging it for foreign 
commodities, it would not in future be produced, 
and those who produced it would be thrown out of 

The first commodities a country usually exports 
is agricultural produce, which she exchanges for 
manufactured goods ; this is still the case with 
America, on account of its being a newly settled 
nation ; it is also the case with Poland and Russia, 
those countries having made slower progress in 
wealth and population than the other communities 


of Europe. W'lic'ii nations are considerably ad- 
vanced in wcaltli and population, all the food they 
raise is retjuired at home, and uianulactures are 
established in order to employ the increased num- 
bers of people ; in the course of time they find it 
expedient to export manvifacturcd ^oods in return 
for corn, which the}' can obtain cheaper by im- 
portation than by raising it on inferior soils at 
liome. And it is at this point that England h 
Slow arrived. 


I am surprised that foreign commerce witli dis- 
tant countries should ever oH'er sufficient profits to 
afford a compensation to the merchant for the dis- 
ixdvantages arising from the slow return of capital. 

MRS. B. 

If it did not, no merchant woukl enfra£0 in it. 
The greater the distance of the market to which 
lie sends his goods, the greater must be the profits 
on their sale, to make up not only for the tardy 
leiurn of his capital, but also for the charges of 
convevancc of the m)ods. I'reijjht and insurance 
from sea risks arc bodi to be deducted from the 
piofits of the merchant in foreign trade. 


Tlieii since wi- arc obliged to sell our goods at 
hucli high prices in distant markets, 1 wonder tliat 

s 3 


wc should find purchasers for them : would it not 
answer better for those countries to produce them 
at home? 

iMRS. B. 

You may be assured that no ration will pur- 
chase from abroad what may be procured of the 
same quality and for less expense at home. But 
ail countries are not equally capable of producing 
the same kind of commodities, either rude or mar 
nufactured. The gifts of nature are still more 
diversified in the different climates of the earth, 
than the habits and dispositions of men. It would 
be impossible for us at any expense to produce the 
wines of Portugal, on account of the coldness of 
our climate. We can procure them only by an 
exchange of commodities : the Portuguese take our 
broad cloth in return : this, it is true, they might 
manufacture at home ; but as our climate is pecu- 
liarly favourable to pasturage, and our workmen 
particularly skilful in manufactures, broad cloths 
could not be made in Portugal equally good at the 
same expense, including the charges of freight and 
insurance ; and whilst the Portuguese can purchase 
them of us for less than they can fabricate them at 
home, it is certainly their interest to procure them 
in exchange for commodities the culture or fabri- 
cation of which is more suited to the nature of their 
climate and the habits of the people. 

But the difference of price of our manufactured 


goods at home or abroad is not so great as you 
would imagine; in articles of small bulk it is very 
trifling. I recollect some years since purchasing 
an English pocket-book at Turin for nearly the 
same price that it would have cost in London. 


How, then, was the expense of conveyance de- 
frayed ; and what compensation was there for the 
slow return of capital ? 

MRS. B. 

These expenses probably did not more than 
counterbalance the high rent and taxes paid by 
London shopkeepers, which I believe are com- 
paratively insignificant at Turin. There might, 
perhaps, also be some bounty on the exportation 
of such goods, which would enable the merchant to 
sell them at a lower price. 


Pray what is a bounty on goods? 

MRS. B. 
It is a pecuniary reward given by government 
for the exportation of certiiin goods. Govern- 
ments, so far from partaking of your prejudices 
against foreign trade, often think it right to encou- 
rage the exportation of their manufactures by such 
iinificial measures. 

s 4 



A bounty, then, on any commodity has the effect 
of inducing merchants to export more of it than 
they would otherwise do, as it raises their profits. 
But in consequence of this, capital will be drawn 
into that trade beyond its due proportion? 

MItS. B. 

Certainly ; a bounty often tempts merchants to 
invest capital in a trade which otherwise would not 
answer ; that is, to export goods which would not 
yield a profit, after paying the expenses of con- 
veyance, without such encouragement ; and this 
capital, were it not artificially drawn out of its 
natural course, would flow into channels which 
would yield profits, without any expense to go- 


Here, then, my apprehension of foreign trade is 
well-founded ; for more capital is drawn into it 
than is required to preserve the equality of profits. 


That is sometimes the case ; but it may also be 
unduly drawn liom one branch of foreign com- 
merce to another. The effect of bounties, how- 
ever, is generally counteracted by the nations with 
whom we trade. Alarmed at our thus forcing our 
goods upon them, and dreadfully apprehensive of 


its inteiTeriiig wkh the sale of their own iiianuftic- 
tures, they inmicdiatcly lay a duty on the commo- 
dity Oil which we grant a bounty, and oblige it to 
pay, on entei'ing their territory, a sum at least 
equivalent to that which we bestow on it on quit- 
ting our own. 


What a pity that either party should interfere to 
check, and restrain the natural course of commerce ! 
The disease, however, seems to call for the re- 
medy ; as it is sometimes expedient to take one 
poison as an antidote to another. 

MRS. B. 

If we are so generous, or so ab>urd, as to en- 
able foreigners to purchase our connnotlitics at a 
cheaper rate, by paying a part of the price for 
them, are we not doing them a service, and our-r 
selves an injury ? And is it wise in them to en- 
deavour to counteract such a measure ? 


True; I did not consider it in that point of 
view. It is really laughable to see two nations, 
the one strenuously endeavouring to injure itsclti 
whilst the other studiously avoids receiving a bcr 
nefit ; and thus, by the mutual counteraction of 
each other's artifice, they leave the trade to loH.ovv 
its natural cotn'sc. 

s 5 


I am now perfectly satisfied of the advantage ot 
obtaining, by means of foreign commerce, sucl: 
articles as cannot be produced at home; but I 
confess I do not feel the same conviction with re- 
gard to commodities which might be produced at 
liome, though with some additional expense. 

MRS. B. 

"Why should it not be the interest of a country 
as well as that of an individual to purchase com- 
modities wherever they can be procured cheapest? 
It might be very possible, as it has been observed by 
an ingenious writer *, for England to produce at a 
great expense of labour the tobacco wliich we now 
import from Virginia : and the Virginians, with 
no less difficulty, might fabricate the broad cloths 
with which we furnish them. But if our climate is 
better adapted to pasturage, and that of Virginia 
to the culture of tobacco, it is evident that the ex- 
change of these commodities is a mutual advan- 


But are not the goods exchanged in trade of 
equal value ? If we send the Virginians a thousand 
pounds worth of broad cloths, they will send us 
only a thousand pounds worth of tobacco in return. 

* Sir Francis Divernois. 


It may be a convenient measure, and the ex- 
chang'mg merchants will each make their profits; 
but 1 cannot perceive how the country can derive 
any accession of wealth from such traflic. 

MRS. B. 

Recollect that we said trade gives an additional 
value to commodities by bringing them from places 
where they are plentiful to tiiose where they are 
scarce. When we ship off 1000/. worth of broad 
cloths for Virginia, and the Virginians export 
1000/. worth of tobacco for England, the com- 
modities are of equal value; but they each acquire 
an additional value during the transport; the to- 
bacco was not worth so nuich in Virginia as it is 
when it arrives in England, because, not being 
cultivated here, it is more scarce and in greater 
demand with us. The broad cloth was not worth 
so nmch in England as it is when it reaches Virginia, 
because, not being fabricated in that country, it is 
more scarce and in greater demand there. 


Very true ; but if we both cultivated tobacco and 
fabricated broad cloths ; and if the Virginians did 
the same, each country would be supplied at home, 
and the expense of conveyance of tiic two cargoes 
exchanged would be saved. 

s a 


MRS. B. 

If we could raise tobacco at as little expcu?c as it 
is (lone in Virginia, and the Virginians could ukiiiu- 
facturo broad clotiis as clieap as they can purchase 
them of us, your argument would be just; but that 
is not the case. To make this clear to you, let us 
examine what quantity of labour is bestowed upon 
the production of these several commodities. If the 
bix)ad cloth which we send to Virginia cost us the 
labour of one man we will say for 1000 days, while 
the tobacco which we receive in exchange would 
have cost us 2000 days' labour to produce at 
home, do we not save a thousand days' labour ? 
and is not the advantage to the Virginians similar, 
if the tobacco which cost them 1000 days* labour 
to raij;.e, will exchange for English broad cloth 
which they could not have manufactured under 
2000 days' labour ? 


By such an exchange, then, each country saves 
1000 days' labour? 

MRS. B. 

Yes ; and to save is to gain ; for the thousand 
days' labour thus economised arc emplo^-ed in the 
production of some other connnodity, which is so 
inuch clear gain to each country. 




Then each country procures the commodity it 
wants at lialf the expense which would have been 
rwjuircd to produce it at home? 

MRS. B. 

Just so. To jnit the question in other words, 
we may say, if by the cmploynient of 50,000/. in 
tjje \'irginia trade we can obtain as much tobacco 
as would require 1 00,000/. if cultivated at home, 
there is 50,000/. cconomise<l, which will be em- 
ployed in producing something else. The advan- 
tages of foi*eign commerce, it is true, are seldom 
carried so far as a saving of half the expenses of 
production ; but tliey must alwavs exist in a greater 
<jr less degree; for it is evident that no nation will 
purchase from abroad what can be jiroduced 
equally cheap and good at home. 


When goods are equally good and cheap I cer- 
tainly prefer buying them of shojis in tlic neigh- 
bourhood rather than at a distance, because it is 
more convenient ; but why merchants should feel 
the same preference I do not clearly see : provided 
the goods they receive in tlicir warehouses are of 
the same quality and price, I should think it W(»ul(( 
be immaterial to them from wIkiicc tliev tanic ? 


MRS. B. 

They, like you, find advantages in dealing with 
their neighbours; it enables them to ascertain bet- 
ter the character of the persons of whom they 
make their purchases ; it affords them the means 
of protecting themselves against imposition, and of 
applying a legal remedy in case of necessity. As 
long as profits are equal, therefore, (independently 
of risk,) a merchant will always prefer employing 
his capital in the home trade; and it is only 
superior profits that can tempt him to enter on a 
trade in which he is exposed to greater risks. 
You may recollect we formerly observed that the 
chances of gain must always be proportioned to 
the chances of loss. 


I confess that before this explanation I never 
could comprehend how foreign trade could be a 
mutual advantage to the countries engaged in it, 
for I imagined that what was gained by the one 
was lost by the other, 

MRS. B. 

All free trade, of whatever description, must be 
a mutual benefit to the parties engaged in it ; the 
only difference that can exist with regard to profit 
is, that it may not always be equally divided be- 
tween them. An opposition of interests takes place, 


not between merchants or countries excliangiiig 
their connnodities, but between rival dealers in the 
same connnodity; and it is from that circumstance 
probably that you have been led to form such an 
erroneous idea of commerce. Do you not recollect 
our observing, some time since, that competition 
amongst dealers to dispose of their commodities 
renders them cheap, whilst competition amongst 
purchasers renders them dear. When you make 
any purchase, are you not sensible that the greater 
the number of shops in the same neighbourhood 
dealing in the same commodity, the more likely 
yon are to purchase it at a low price ? 


Yes, because the shopkeepers endeavour to un- 
dersell each other. 

MRS. B. 

It is therefore the interest of the dealer to nar- 
row competition, whilst it is that of the consumer 
to enlarge it. Now which do you suppose to be 
the interest of the country at large ? 


That of the consumers ; for every man is a con- 
sumer, even the dealers themselves, who, thou<j-h 
they are desirous of preventing competition in their 
own individual trade, must wish for it in all other 
species of commerce. 


MRS. B. 

No doubt ; it is by free and open competition 
alone that extravagant prices and exoi'bitant ]Drofits 
are prevented, and that the public are supplied 
with commodities as cheap as the dealer can afford 
to sell them. 


But in regard to luxuries, Mrs. B., may we not 
be allowed to encourage those of our own produc- 
tion in preference to those brought from foreign 
countries ? 

MRS. B. 

The commercial state of France during Bona- 
parte's system of prohibition will furnish a very 
satisfactory answer to your question. The Wcst- 
indian produce, which the French were prohibited 
from purchasing, consists chiefly of certain luxuries 
of which they could not endure to be deprived ; so 
that, (for instance,) they were employed, at an im- 
mense expense of capital, in extracting a saccharine 
juice from various fruits and roots to answer in an 
inferior degree the purpose of sugar ; they cultivated 
bitter endives, the root of which supplied them with 
a wretched substitute for coffee; their tea was com- 
posed of indigenous herbs (^ a very inferior flavour 
to that of China. In a word, labour was multiplied 
to produce commodities of inferior value ; or they 
would have been altogether deprived of a variety of 
(Comforts to which they liad been accustomed, and 


ON FOllEIGN TRADr:. 101 

Avhicli, besides the pleasure derived from the enjoy- 
ment of them, we have observed to be one of tlie 
strongest incitements to industry. 

But the privation of the consumers of kixuries is 
but a trifling evil compared with the consequences 
of such restrictions upon the labouring classes ; 
for its effect is to increase the difficulty of raising 
produce, and, consequently, to diminish the quan- 
tity of capital, the fund upon which the poor 

Mr. Say, who witnessed all the pernicious effects 
of this system, thus expresses himself: " C'est un 
*' bien mauvais calcul que de vouloir obligcr la 
*' zone temperee a fournir des produits a la zone 
** torride. Nos terres produisent peniblement en 
** petite quantite, et en qualite mediocre, des ma- 
*' tieres sucrees et colorantos, qu'un autre climat 
" donije avcc profusion ; mais elles produisent, au 
" contfairc, avec facilite, des fruits, des cereales 
" que leur {)oids et leur volume nc permcttent 
*' pas de tirer de bien loin. Lorsque nous con- 
" danmons nos terres a nous donner ce qu'elles 
" produisent avec desavantage aux depends de ce 
" (ju'elles produisent j)liis volontiers; lorsque nous 
" achetons fort cher, ce que nous payerions a fort 
" bon marche, si nous le tirions des lieux ou il 
*' est produit avec avantagc, nous dcvcnons nous 
" niemes victimes de notre j^ropre iblic. Lc comble 
** de I'habilite est de tirer le parti le plus avantagcux 


" des forces de la nature ; et le comble de la de- 
" mence est de latter centre elles; car c'est em- 
" ployer nos peines a detruire une partie dcs 
" forces qu'elle voudroit nous preter." 


The prohibition of foreign commodities has, then, 
an effect precisely the reverse of that of machinery; 
for it increases instead of diminishing the quantity 
of labour; and produces inferior, instead of more 
perfect connnodities. 

MRS. B. 

And, consequently, the wealth, prosperity, and 
enjoyments of a country so situated, instead of 
augmenting, would decline. Let us hear what Dr. 
Franklin says on the subject of restrictions and 

" Perhaps, in general, it would be better if go- 
" vernment meddled no further with trade than to 
" protect it, and let it take its course. Most ol" the 
*' statutes or acts, edicts, arrets, and placards, of 
" parliaments, princes, and states, for regulating, 
" directing, or restraining of trade, have, we think, 
*' been either political blunders, or jobs obtained 
" by artful men, for private advantage, under pro- 
" tence of public good. When Colbert assembled 
" some wise old merchants of France, and desired 
" their advice and opinion how he could serve and 


*' promote commerce : their answer, after consult- 
*' ation, was in three words only, ' Laissez ?ious 
*^ Jaire.^ It is said by a very solid writer of the 
I ** same nation, that he is well advanced in the 
*' science of politics who knows the full force of 
" that maxim, y;a5 trop gouvcnicr, which perhaps 
*' would be of more use when applied to trade than 
" in any other public concern. It were, therefore, 
** to be wished that commerce were as free between 
** all the nations in the world, as between the 
*' several counties of England. So would all, by 
** mutual communication, obtain more enjoyment. 
" Tliose counties do not ruin each other by trade, 
** neither would the nations. No nation was ever 
** ruined by trade, even seemingly the most disad- 
" vantageous. Whenever desirable superfluities 
" are imported, industry is thereby excited and 
<* superfluity produced" 


Well, I abandon the exclusive use of English 
luxuries; but the very argument you have used 
affainst them makes me think that it must be ad- 
visable to rely on home produce for the necessaries 
of life. Were we dependent on foreign countries 
for a supply of corn, what would become of us if 
those countries, in time of war, prohibited its ex- 
portation ? 


MRS. B. 

Your question \rl\\ lead us into a discussion en 
the corn-trade, which it is too late for us to enter 
upon to-day ; wc will, therefore, reserve it for our 
next meetinff. 



Conit7mation of FOREIGN TRADE. 








MRS. B. 

When we last parted, you expressed a wish that 
we should raise all our corn at home, in order to 
be completely independent ol" the casualties attend- 
ing a foreign supply. 



Yes; for were we at war with those countries 
which usually furnished us with corn, they would 
withhold the supply. Or, should they experience a 
dearth, they would no longer have it in their power 
to send us corn. 

MRS. B. 

We occasionally import corn from different 
parts of America, from the shores of the Baltic, 
and those of the Mediterranean seas. Now it is 
very improbable either that we should be in a state 
of warfare with those various countries at the same 
period of time, or that they should all be afflicted 
with a dearth of produce in the same season. 
There is much greater chance of a scarcity pre- 
vailing in any single country than in every part of 
the world at once ; and sliould we depend wholly 
on that country for our supply, where would be 
our resource in case of a deficiencj' ? 


Under such circumstances it would certainly be 
right to import corn ; I object only to doing so 
habitually, and not depending, in ordinary times, 
on the produce of our own country. 

MRS. B. 

If we apply to corn countries only in seasons of 
distress, we shall find it very difficult to obtain 


relief. Those countries raise corn expressly for 
the nations which they usually supply with tliat 
article : but they will have but little to spare for a 
new customer, who, from a dearth at home, is 
compelicd to seek for food abroad ; and we could 
obtain it only by outbidding other competitors. 
The supply, therefore, would be both scanty, and 
at a price which the lower ranks of people could 
ill afford to pay ; so that there would be great dis- 
tress if not danger of a famine. 


To prevent such a calamity we have only to 
raise so large a quantity of corn at home as will 
afford a plentiful supply in years of average pro- 
duce; then in seasons of abundance we have the 
resource of exportation, and in bad seasons we 
might still have a sufficiency. 

MRS. B. 

It is impossible to raise at all times a sufficiency, 
without having often a superfluity. This it; par- 
ticularly the case with corn, as it is the most va- 
riable of almost all kinds of agricultural produce. 
If, therefore, we wish to raise such a quantity as 
will always secure us against want, wo must in com- 
mon seasons have some to spare, and in abundant 
years a great superfluity. 

Now the more corn-land we cultivate, the higher 


will the price of corn be in average seasons. You 
start, Caroline ; but paradoxical as this may ap- 
pear, if you reflect upon the causes which occasion 
the regular high price of corn, independently of 
the variations of supply and demand, you will un- 
derstand it. 

The more corn is grown in a country, the greater 
will be the quantity of inferior land brought into 
cultivation, in order to produce it ; and the price 
of corn, you know, must pay the cost of its pro- 
duction on the worst soil on which it is raised *, 
otherwise it would cease to be produced. If, there- 
fore, in order to insure a home supply, we force 
an ungrateful soil, at a great expense of capital, to 
yield a scanty crop, we raise the price of all the 
corn of the country to that standard, and we thus 
enable the landed proprietors to increase their 
rents. — Then by enhancing the price of the first 
necessaries of life we raise the rate of wages, in 
order to enable the labouring classes to live. 


These are indeed most ruinous consequences. 

MRS. B. 

Nor is this all ; when the home supply proves 
iiuperabundaut, what is to become of it ? The un- 

* See Conversation on Rent. 



natural high price at which it usually sells in our 
market, owing to the forced encouragement given 
to agriculture, renders it unsaleable in foreign 
markets until the pries is fallen so low as to be 
ruinous to farmers. 


I cannot easily bring myself to look upon a 
superfluity of the necessaries of life as a calamity ; 
— if it is injurious to the farmer, what an advan- 
tage it is to the lower classes of people ! 

MRS. B, 

The advantage is of a very temporary nature. 
The farmer who cultivates poor land in hopes of a 
remunerating price, must be ruined if he continues 
to cultivate at the low price occasioned by super- 
fluity : he will therefore throw up the inferior lands, 
and the consequence will be that less corn will be 
produced in succeeding years than is requisite for 
the supply; and the superfluity will be succeeded by 
dearth or famine. Thus the price of corn will be 
continually fluctuating between the low price of a 
glutted market and the high price of scarcity. 

A redundance of the necessaries of life is in some 
respects attended with more pernicious conse- 
quences than the excess of any other species of com- 
modity. If the market were overstocked with tea 
and coffee, those articles would fall in price, and 



would not only be more freely consumed by the 
people accustomed to enjoy them, but the redution 
of price would bring them within reach of a lower 
and more extensive class of people. Now this can- 
not happen with bread, because it is already the 
daily and most common food of the lowest ranks of 
society ; and though in seasons of great plenty tliey 
may consume somewhat more than usual, the dil- 
ference will not be very considerable; they will 
rather avail themselves of the cheapness of bread to 
devote a larger share of their wages to other grati- 
fications ; they will eat more meat, drink more 
spirits, or wear better clothes. The superabund- 
ance of corn will therefore remain in the granary 
of the farmer, instead of supplying him with the ;| 
means of carrying on the cultivation of his land: 
the labourers who raised that coin will probably 
be driven to the parish for want of work, and the 
consequences which will ensue to the community 
who would have been fed by the iiuits of their in- 
dustry, it is easy to conceive. 


But do you then regard a low price of corn, 
under all circumstances, as an evil ? 

MRS. u. 
On the contrary, I consider it in general as 
highly advantageous; it is atter.dcd with injuiioiis 



consequences only when it nill not remunerate the 
farmer. But when corii can be raised at a small 
expense, it can afford to be sold at a low price. It 
is this which renders it 'desirable to bring only 
good land under tillage, and oot to force poor soils 
to yield scanty and expensive crops. 

Countries that have plenty of good laud and but 
little capital find no branch of industry so advan- 
tageous as the productions of agriculture; and the 
exportation of corn, we have observed, is their first 
attempt at foreign commerce. Thus America, being 
a newly settled country, and as yet but thinly inha- 
bited, has great choice of fine soils, and can raise 
corn at a very small expense of production ; accord- 
ingly we find that she not only feeds her own popu- 
lation, but regularly exports corn. 

Poland and Prussia are still agricultural coun- 
tries, exporting corn ; but old established countries 
in general, such as England, which are far advanced 
in arts and manufactures, and have raised a popula- 
tion too great to be maintained by the produce of her 
rrood soil >, will find it answer better to import some 
portion of the corn they consume, and to convert 
their inferior lands into pasture. This would not 
only lower the price of bread, but also that of meat, 
milk, butter, and cheese, the supply of which would 
be increased by the conversion of corn land into 
pasture. When the home crops proved abundant, 
they would import let^s; when scanty, they would 
T 2 


import more. Thus without difficulty they would 
pi'oportion the supply to the demand, and keep botli 
bread and wages steadily at moderate prices. 


But with the additional expenses of freight and 
insurance, can we import corn from America 
cheaper than we can produce it at home ? 

MRS. B. 

In ordinary seasons we certainly can ; but not at 
the present price of corn. 


And do you suppose that the present low price 
of corn, and the distressed state of agriculture, are 
owing to our producing too much corn at home ? 

MRS, B. 

I have no doubt but that it is one of the causes, 
but it is connected with many others, which render 
the question so complicated and intricate that we 
must leave it to wiser heads than our own to un- 
ravel it. 

The system of growing a home supply of corn, 
in countries where great capital affords the means 
of maintaining a very large population, is attended 
not only with the disadvantage of keeping the price 
pf corn high, in average seasons, but likewise occa- 



slons greater fluctuations of" price, in times of dearth 
or abundance, than if those casualties were dimi- 
nished by a free corn-trade with otlier countries. 
It would perhaps be difficult to say whether we have 
-suffered most from a high or a low price of corn, 
within these last twenty years ; but we have acquired 
sufficient experience of the evils arising from both 
these extremes to think, that the wisest measures 
we could pursue, would be to adopt such as would 
prevent great fluctuations of price. 

Nothing is more injurious to the interests of the 
labouring classes than great and sudden fluctuations 
in the price of bread : they are either distressed by 
unexpected poverty, or intoxicated by sudden pros- 
perity ; but if that prosperity is the effect but of one 
fruitful season, it gives rise to expenses they are un- 
able to maintain. It is but a gleam of sunshine on 
a wintry day, and the buds it untimely developes 
are nipped by the succeeding frost. 


Well, Mrs. B., I see that you will not allow of 
ajiy exception in favour of the corn-trade, and that 
I must consent to admit of the propriety of leaving 
all trade whatever perfectly free and open. 

MRS. B. 

That is certainly the wisest way. Instead ot 
;3iruggling against the dictates of reason and nature, 
T 3 


and madly attemptiiii,^ to produce every tiling at 
home, coimtries should study to direct their labours 
to those departments of industry for which their 
situation and circumstances are best adapted, 


Yet you must allow me to observe, tliat there are 
numerous instances of our liavin^ established 
flourishing manufactures of goods which we formerly 
procured entirely from foreign commerce ; such, for 
instance, as china-wave, muslins, damask linen, and 
a variety of others. Now docs not this imply that 
we may sometimes direct our labour to a new 
branch of industry with greater advantage than by 
importing the goods from foreign countries ? 

MRS. B. 

It certainly does ; and it shews also, that as soon 
as we are able to cultivate or fabricate the commo- 
dities Ave have been accustomed to procure from 
foreign parts as cheap as we can import them, we 
never fail to do so. But the period for the intro- 
duction of any new branch of industry should be 
left to the experience and discretion of the indivi- 
duals concerned in it, and not attempted to be 
regulated or enforced by government. James I. 
attempted to compel his subjects to dye their woollen 
cloths in this country, instead of sending them to 
the Netherlands, as had been the usual practice ; 


but the English-dyed woollen cloths provcil both 
of worse quality and dearer tlian those of the Ne- 
therlands, and James was obliged to abandon his 
plan. Had the sovereign not interi'ered, dyers 
would have establisiied themselves in this country 
as soon as the peoj)le had acquired sufficient skill to 
undertake the business; but the discouragement 
proiluccnl by an unsuccessful attempt probably re- 
tarded the natund period of adopting it. 

If it were possible for a country both to cultivate 
and manufacture all kinds of produce with as little 
labour as it costs to purchase them from other 
countries, there would be no occasion for foreign 
-commerce: but the remarkable manner in which 
Providence has varied the productions of nature in 
ditFcrcnt climates, appears to indicate a design to 
promote an intercourse between nations, even to 
the most distant reijions of the earth; an intercourse 
which would ever prove a source of reci|)rocal be- 
nefit and happiness, were it not often perverted by 
the bad passions and blind policy of man. 


And independently of the diversity of soils, cli- 
mates, and natural jjroihiclions, I do not suppose 
that it would be possible for any single country to 
succectl in all branches of industry, any more than 
for a single individual to ac(juire any considerable 
skill in a great variety of pursuits? 
r 1 


MRS. B. 

Certainly not. The same kind of division ot 
labour which exists among the individuals of a 
community, is also in some degree observable 
among different countries; and when particular 
branches of industry are not formed by local cir* 
cumstances, it will generally be found the best po- 
licy to endeavour to excel a neighbouring nation in 
those manufactures in which we are nearly on a 
par, rather than to attempt competition in those in 
which by long habit and skill they have acquired a 
decided superiority. Thus will the common stock 
of productions be most improved, and all countries 
most benefitted. Nothhig can be more illiberal 
and short-sighted than a jealousy of the progress of 
"neighbouring countries, either in agriculture or 
manufactures. Their demand for our commodities, 
so far from diminishing, will always be found to 
increase with the means of purchasing them. It is 
the idleness and poverty, not the wealth and in- 
dustry of neighbouring nations, that should excite 


A tradesman would consider it more to his in- 
terest to set up his shop in the neighbourhood of 
opulent customers than of poor people who could 
not afford to purchase his goods ; and why should 
not countries consider trade in the same point of 
view ? 


MRS. B. 

Mirabeau, in his " Monarchif Pnissienne" has 
carried this principle so far, that it has made him 
doubt whether tlie trade of France was injured by 
the revocation of the edict of Nantz, which drove 
so many skilful manufacturers and artificers out of 
the country. 

" II est en general un principe sur en commerce; 
" plus vos acheteurs seront riches, plus vous leur 
" vendrez ; ainsi les causes qui enrichissent un 
** peuple augmente toujours I'industrie de ceux qui 
*' ont des affaires a negocier avec lui. Sans doute 
" c'est unc demence frc-nctique de chasser 200,000 
*♦ individus de son pays pour enricher celui des 
" autres ; mais la nature qui veut conserver son 
*' ouvrage ne cesse de reparer, par des compensa- 
*' tions insensibles, les erreurs des hommes, et les 
" fautes les plus desastreuses ne sont pas sans 
" remedes. La grande verite que nous offre cet 
*' exemple memorable, c'est qu'il est insense de 
" detruire I'industrie et le commerce de ses voisins, 
■" puisqu'on aneantit en meme tems chez soi merae 
** ces tresors. iSi de tels efforts pouvoient jamais 
** produire leur effet, ils depeupleroient le monde, 
« et rendroient tres infortunee la nation qui auroit 
*' eu le malhcur d'engloutir toute I'industrie, tout 
" le commerce du globe, et de vendre toujours 
'' sans jamais achetcr. Heureuscment la Provi- 
*' dencc a tcUemcnt dispose les choscs que les dchrcs 
T 5 


*' des souverains nc sauroient arreter entieremcnt 
*' ses vues de bonheur pour notre espece." 


The more I learn upon this subject, the more I 
feel convinced that the interests of nations, as well 
as those of individuals, so far from being opposed 
to each other, are in the most perfect unison. 

MRS. E. 

Liberal and enlarged viev.s will always lead to 
similar conclusions, and teach us to cherish senti- 
ments of universal benevolence towards each other ; 
hence the superiority of science over mere practical 


Suhjcd of FOREIGN TRADE conti7iucd. 







MRS. B. 

I HOPE that you are pow quite satisfied of the 
advantages which result from foreign commerce ? 


Perfectly so; but there is one thing that per- 
plexes me. In a general point of view I conceive 
Uiat trade consists in an exchange of commodities ; 
but I do not understand how this exchange takes 
place between merchants. The winc-mcrchant, 
for instance, who imports wine from Portugal, docs 
T f> 


not export goods in retjwn for it ; his trade is con- 
fined to the article of wine ? 

MRS. B. 

There are many general merchants wl>o both 
export and import various articles of trade. Thus 
the Spanish merchant, the Turkey merchant, and 
the West-Indian merchant, import all the diiFerent 
commodities which we receive from those countries, 
and generally export English goods in return. It 
is, however, the countries, rather than the indi- 
viduals, who exchange their respective productions ; 
for both the goods exported and imported are 
in all cases bought and sold, and never actually 


But since the merchants of the respective coun- 
tries do not literally exchange their goods, they 
must each of them send a sum of money in pay- 
ment; and these sums of money will be nearly 
equivalent. If the London merchant has lOCK)/. 
to pay for wines at Lisbon, the Lisbon merchamt 
will have nearly the same sum to pay for broad 
cloth in London. It is to be regretted, therefore, 
that the goods should not be actually exchanged, 
or that some mode should not be devised of reci- 
procally transferring the debts, in order to avoid so 
much useless expense and trouble. 


MRb. B. 

Such a mode has been devised, and these pur- 
chases and sales arc usually made without the in- 
tervention of money, by means oi written orders 
called bills of exchaiige. 


Is not then a bill of exchange a species of paper- 
money like a bank-note ? 

MRS. B. 

Not exactly ; instead of being a promissory note, 
it is an order addressed to the person abroad to 
whom the merchant sends his goods, directing him 
to pay the amount of the bill, at a certain date, to 
some third person mentioned in the bill. Thus 
when a woollen merchant sends broad cloths to 
Portugal, he draws such a bill on the merchant to 
whom he consigns them ; but instead of sendijig it 
with the goods to Portugal, he disposes of it in 
London : that is to say, he enquires whether any 
person wants such a bill for the j)nrpose of dis- 
charging a debt in Portugal. lie accordingly ap- 
plies to some wine-merchant who owes a sum of 
money to a mercantile house at Lisbon for wines 
imported from that country, and who finds it con- 
venient to avail himself of this mode of payment, in 
order to avoid the expense of sending money to 
Portugal. He therefore gives the woollen-merchant 


tlie value of his bill, and having his own name or 
that of his correspondent in Portugal inserted in 
the bill as the third person to whom the amount of 
the bill is to be paid, transmits it to his corre- 
spondent in Portugal, who receives the money from 
the person on whom it is drawn. 


The same bill then is the means of paying for 
both commodities, the broad cloth and the wine ; 
and it supersedes the necessity of transmitting two 
sums of money for that purpose. A bill of ex- 
change is a most convenient and economical con- 
trivance, and I feel very much inclined to avail 
myself of it. A friend of mine at York owes me a 
sum of money for purchases I have made for 
her in London ; and my sister Emily is indebted 
about the same sum to a glover at York. I might, 
therefore, draw a bill of exchange on my friend, 
Avhich Emily would buy of me, and forward it to 
the glover at York for the purpose of discharging 
her debt for the gloves ; and he would receive the 
money from my friend on whom it was drawn. It 
is, if I understand you right, by such transfers of 
debts that commodities are really exchanged be- 
tween merchants ? 

MRS. B. 

I am glad to see that you understand the use of 


a bill of exchange so well. It will therefore be 
evident to you that if, when two countries are 
trading together, the value of the goods exported 
and imported be equal, the amount of the bills of 
exchange in payment of those goods will be so 
likewise ; and the debts will be mutually settled 
without the necessity of transmitting money. 


That is quite clear: but it must, I suppose, 
frequently happen, that the value of the goods 
exported and imported is not equal, and in that 
case the bills of exchange will not settle the whole 
of the respective debts, and some balance or sum of 
money will remain due from one cpuntry to the 

MRS. B. 

This is called the balance of trade. In order to 
explain to you in what manner such a debt is 
settled, let us take, for example, our trade with 
Russia : — if, in trading with that country, our ex- 
ports and imports are exactly equal in value, the 
cxchan<T[e between Russia and England is said to 
be at par, or equal. 

But if the value of our imports should have 
exceeded our exports, so that, for instance, we 
should have received more hemp and tallow Jrom, 
than we have sent broad-cloths and hardware to 
Russia, there will be a greater amount of bills 


drawn by Russian merchants on England, than by 
EngHsli merchants on Russia. After their reci- 
procal debts are settled, therefore, as far as the 
bills will enable them to do so, there will remain 
:» surplus of Russian bills drawn on England, 
which will require to be paid in money. 


Then some of our merchants will be under the 
necessity of sending money to Russia in payment 
of their debts. 

MRS. B. 

This every merchant endeavours to avoid, on ac- 
count of the heavy expenses of freight and insur- 
ance of the money ; as soon, therefore, as there 
appears to be a scarcity of English bills on Russia, 
every English merchant who is indebted to that 
country for hemp and tallow is eager to procure 
them. The competition of merchants for these 
bills raises their price, for they find it answer to 
give something more than the amount of the bill 
rather than send gold to Russia. The sum thus 
given for a bill above its amount is called a pre- 
mium, and our exchange with Russia is, in this 
case, said to be wifavaurable, or beloiv par. 


That is to say, that a man who owes a sum of 


money to Russia, must give something more tlian 
the amount of the debt in order to pay it ? 

MRS. B. 
Yes ; and the amount of the premium given de- 
pends, of course, on tlie degree of scarcity of the 


And as the scarcity of the bills is owing to the 
value of our imports exceeding that of our exports, 
our exchange must be favourable or unfavourable 
with any country in proportion as the exports or 
imports prevail. 

But our exchange with Russia, I suppose, can 
never fall below what it would cost to transport 
gold to Russia; for as it is optional with our mer- 
chants to pay either in bills or money, if the pre- 
mium on the bill were greater than the expense ol 
sending money, they would prefer the latter mode 
of payment. 

MRS. B. 

Undoubtedly ; and as the expense of sending 
gold to different countries varies according to the 
distance, and to the facility or difficulty of our in- 
tercourse with them, a favourable or unfavourable 
exchange with those countries will vary accordingly. 


But the premium given for bills of exchange, 


alter all, docs not supersede the necessity of our 
paying the balance of debt in gold; it merely re- 
moves the difficulty from one individual to an- 
other : for those merchants who finally cannot 
obtain bills must transmit money in payment. 

MRS. B. 

I beg your pardon ; an unfavourable exchange 
in a great measure corrects itself; but this, it is 
true, requires some explanation. There are mer- 
chants who make it their business to trade in bills 
of exchange; that is to sa}', to buy them where 
they are abundant and cheap, and sell them where 
they are scarce and dear. Thus bills of exchange 
become an article of commerce like gold, or any 
other commodity. Therefore when English bills 
on Russia are scarce, those merchants buy up the 
bills drawn by other countries on Russia, and 
supply the English market with them. 


But when English bills on Russia arc scarce, 
there may perhaps be no surplus of bills on Russia 
in other countries to supply the English market. 

MRS. B. 

Generally speaking, when there is a deficiency 
of bills on Russia in one country, there will be a 
redundancy of 'them in some other ; for though the 


cxportations and importation of Russia with any 
particular country may be unequal, her general 
exportations and importations will, upon the whole, 
nearly balance each other : because if there was a 
constant excess of importation, Russia would be 
drained of money to pay for it; if, on the contrary, 
there was an excess of exportations, the money 
received in payment would accumulate, and de- 
preciate the value of the currency of the country. 
The goods which Russia purchases, therefore, 
from foreign countries, must, upon the long run, 
be to the same amount as the goods which she sells 
in exchange for them ; so that if there is a balance 
of debt due to Russia from one country, there must 
be a balance of debt due from Russia to another 
country. The bills of exchange, therefore, drawn by 
Russia on foreign countries, and those drawn by fo- 
reign countries on Russia, will balance each other; 
and it is the business of the dealers in bills to dis- 
cover where there is a superfluity, and where a de- 
ficiency of these bills, with a view to buy them in 
the one place, and sell them in the other. 


If, then, the bill-merchants instead of supplying 
the English market with bills on Russia, bought 
up the surplus of Russian bills on England, it 
woidd equally answer the purpose of paying our 
debt to that country ? 


MRS. B. 

Exactly. In our trade with Italy, for instance, 
we import large quantities of silk, olive oil, and 
various other articles, and our exportations are 
manufactured goods only to a trifling amount. 
The exchange would, in this case, be so unfavour- 
able as to reduce us to the necessity of exporting 
gold in payment for the excess of imports, did not 
the bill-merchants come to our assistance. This 
useful class of men buy up the surplus of Italian 
bills on England, and send them for sale to Ger- 
many, France, Spain, or wherever there is a de- 
ficiency of bills on Italy, and where they will 
consequently sell with profit, 


Thus Germany, France, or Spain, discharge 
our debt to Italy ? 

MRS. B. 

Yes ; provided any of those countries are in our 
debt ; otherwise, you know they would not pur- 
chase our bills of exchange. 


One would imagine that these operations of the 
bill-merchants would invariably have the effect of 
counteracting the fluctuations of exchanges, and 
keep them cpnstantly at par, 


MRS. B. 

It the business of the bill-merchant could be 
transacted with the same celerity and regularity as 
that of the bankers in London, who meet together 
every day, after the hours of business, to settle 
their respective accounts, it might influence the 
exchanges in the manner you suppose. But the 
speculations of the bill-merchant embrace so wide 
a sphere, and so many circumstances occur in the 
course of trade, or of political events, by which 
the exchanges are affected, that no individual pru- 
dence or foresight can prevent great fluctuations. 


Are then merchants often reduced to the necesr 
sity of sending abroad money in payment of foreigQ 
goods ? 

MRS. B. 

Scarcely ever, I believe, excepting where there is a 
greater demand for money than for goods ; for inde- 
pendently of the operations of the bill-merchants, 
there isyet another means of preventingthatexpense. 
When the English merchants who export goods to 
Russia, find that the excess of imports over ex- 
ports, produces a scarcity of their bills on Russia, 
which enables them to sell them to the importing 
merchants at a premium, such an addition to their 
usual profits of trade, induces them to increase their 
exportations, and has, in fact, the effect of a bounty. 


Ibr tlicy can now afford to export gootlswliicli, be- 
fore, did not yield sufficient profits to enable tlieni 
to do it. M'liiist, on the contrary, our importini^ 
merchants of Russian commodities, who are obliged 
to purchase these bills at u premium, (which lias 
the effect of a duty, since it is a clear deduction 
from their profits,) will confine their importations 
to such commodities only as will leave them their 
usual profits, after deducting the premium upon 
the bills with which they were to be paid. 


The premiums, then, which our importing mer- 
chants lose, our exporting merchants gain. This 
must undoubtedly have a considerable effect in en- 
couraging exportation, and restraining importation, 
and tend rapidly to restore the equality of the 

MRS. B. 

The evil, then, of an unfavourable exchange im- 
mediately gives rise to the remedy which corrects 
it, and actually tends to equalise the exports and 
imports. But in order to have completely that 
efU'ect, it would be necessary that the country with 
whom the exchange is unfavourable should require 
as much of our productions as we do of theirs, 
which is not always the case. The unfavourable 
exchange, however, enables the exporting mer- 
chant to af!brd his goods abroad at a lower rate, 


becauiiC a part of his profit is derived from the pre- 
mium on the exchange, and thus more persons 
abroad being able to purchase at the reduced price, 
the market for the goods is enlarged, and a much 
greater quantity consumed. 


All these circumstances, then, together must 
nearly supersede the necessity of sending money 
to balance the account? 

MRS. li. 

Very nearly so, I believe, except with such coun- 
tries as, having mines of their own, may be said to 
produce money. If Spain and Portugal were to 
retain all the gold and silver which they ilerivefrom 
their mines, it would fall so umch in value in those 
countries that no laws could prevent its conveyance 
to others where its value was greater. It woidd be 
the most pro(ital)le article a Spanish or Portuguese 
mo'rchant could export in payment for the goods 
imported; and indeetl we find that they supply 
Kurope with gold and silver, in the same manner 
as we supply it with the produce of our West-In- 
dian colonies, coflee and sugar. We have, in a 
former conversation, observed how the precious 
metals were diflused throughout all civilised na- 
tions, and the supply every where so proportioned 
to the demand, as to admit of no other variation ol 


value than the small difference arising IVoiii the 
expense of bringing them from the mines to the 
different countries where they are wanted. 


But have I not heard of the exchange having 
been much below what it would cost to send money 
abroad ? 

MRS. B. 

That is true ; but I believe it is principally to be 
ascribed to another and a totally different cause, 
wliich nominally influences the exchanges to a very 
great extent. We formerly observed, that a de- 
preciation of value of the currency of a country 
raises the price of commodities in that country. 
Whether the depreciation arises from an unneces- 
sary increase of currency, from an adulteration of 
the coin, or from any other cause, it invariably 
produces this effect. 

Let us suppose the currency of England to be 
depreciated 25 per cent.; that is to say, that a sum 
worth 100/. previous to the depreciation, is now 
really worth only 7^i-9 though it retains its nominal 
value of 1 00/. An English bill of exchange, which 
represents a certain portion of the currency, will 
partake of this depreciation, and will no longer be 
equal in value to a foreign bill of the same amount. 
It would require an English bill of 133/. 6s. 8d. to 
exchange for a foreign one of 1 00/. ; therefore if 


before the depreciation the exchange were at par, 
this circumstance would make it immediately fall 
25 per ceot. 


Would not the evil, then, be remedied by increas- 
ing the exports, and diminishing the imports, as 
when the unfavourable state of the exchange arises 
from the unequal balance of trade ? 

MRS. B. 

Certainly not. For though it is true that in 
both cases the exporting merchant can sell his bills 
at a premium, yet when this premium arises from 
a depreciation of the currency, it cannot be con- 
sidered as any gain to him, because it is exactly 
balanced by the advanced price of the goods he 
exports, which operates as a loss. 


I think I understand it. The depreciation of 
currency which produces the premium on the bill 
of exchange produces also an increase in the price 
of the merchandise, and these effects, resulting from 
the same cause, must always correspond and be felt 
in the same proportion. Thus if a merchant ex- 
ports cloth to Hamburgh which costs him 200/., 
whatever profits he might expect under the ordinary 
state of the currency must be diminished 25 per 
cent., in consequence of his giving 50/, more for his 



cMlli than he would otherwise have done. Yet as 
he will sell the bill of exchange which he draws on 
Hamburgh for the payment of his cloth at a pre- 
mium of 50/., his profits will remain precisely the 
same, upon the whole transaction, as if every thing 
had gone on in its regular way. 

MRS. B. 

You have explained it perfectly well. Remember 
therefore that when the exchange is unfavourable in 
consequence of the depreciation of the currency, it 
is only nominally, not really unfavourable; for it 
may take place when the exports and imports are 
perfectly equal. And recollect also that the differ- 
ence the exchange produces in the sale or purchase 
of bills is neither a loss nor a gain to the parties, and 
that it has no effect either on exportation or im- 


But is it easy to distinguish between two causes 
which are so similar in their effects, and to ascer- 
tain at any time which, of them it is that influences 
the exchange? 

MRS. B. 

Far from it : this has been a subject of much 
discussion, particularly during the late war. If it 
be true that the currency of the country has been 
increased beyond what was required, it must be 



considered as depreciated, and as having nominally 
affected the exchange. 

On the other hand, as the system of warfare was 
remarkably unfavourable to our exportations, the 
balance of foreign debt was very much against us, 
and the expense of transmitting gold considerably 
increased ; so far the exchange may be said to have 
been realli/ unfavourable. It is probable that both 
these causes contributed to the very low rate of our 
exchange during the late war. 

Notwithstanding all the investigation which these 
subjects have undergone, there still prevails, even 
amongst our legislators, the old popular error re- 
specting the balance of trade. Even at this day 
we find persons congratulating the country, that 
the exports exceed the imports, and that in conse- 
quence a balance of money remains due to us, whichf 
is considered as so much gain to the country. 


But do those who maintain such an opinion 
know, that this money would not be due to us, 
unless we had exported a surplus of merchandise to 
an equal amount ? 

MRS. B. 

It is from that circumstance they conceive the 
advantage arises. They assert that since the poor 
are maintained by labour, the more work we poi- 
u 2 


form for other countries, and the more money we 
receive for our work, the richer we must be. 


Not if we export the fruits of their labour and 
receive only gold in return : for the poor are main- 
tained not by the act of labour, but by its pro- 
duce ; and if all that produce were exported, and 
nothing but gold received in exchange, we should 
be much in the situation of King Midas, who was 
starved because every thing he touched was con- 
verted into gold. 

But do not the bill- merchants prevent this im- 
portation of gold, by transferring the bills of ex- 
change from one country to another ? for if our 
balance of trade is favourable with one country, it 
must be unfavourable with another. 

MRS. B. 

No doubt they do. If it were possible to have 
what is called a favourable balance of trade with 
every country, we should accumulate a quantity of 
the precious metals which would answer no other 
purpose than to depreciate our currency. 

The most advantageous trade for both parties 
concerned is when the exports and imports are 
equal, so that the balance does not preponderate on 
either side ; for it is as injurious to one country to 
part with money which is wanted at home for the 


oiirposes of currency, as it is to the other to receive 
it when it is not wanted. 

When a country receives bullion, it should not 
be in payment of a balance of debt, but as a com- 
moditj' for which there is a demand. This demand 
will always take place in thriving countries, not 
only because gold and silver bullion are wanted by 
jewellers and silversmiths for the purposes of luxury ; 
but also because, as the saleable produce of the 
country increases, an additional quantity of cur- 
rency is required for its ciiculation. 


According to this theory of the balance of trade, 
it should always be against Spain and Portugal, 
and favourable to every other country ; because it 
is through Spain and Portugal that all the treasures 
of the new world flow into Europe ? 

MRS. B. 

True ; but they are not sent immediately from 
those countries to the most distant parts of Europe, 
but are transferred through the intermediate coun- 
tries. Thus France sends Louis to Geneva to pay 
for the watches she imports from that ])lace ; or to 
Italy, in payment of raw silks, olive oil, &c. So 
that the countries most distant from Spain and Por- 
tugal would constantly have what is absurdly called 
the balance of trade in their favour; whilst the in- 
ij :' 


teiniediatc countries would liavc it favourable with 
those which were nearer Spain than themselves, 
and unfavourable with those which were more 

This, however, is a general principle, which, 
though true in theory, requires modification, if 
applied to practice. A great variety of circum- 
stances occasion fluctuations in the regular distri- 
bution of the wealth of America. However extra- 
ordinary it may appear, it is not very long since 
we sent considerable quantities of specie to Spain 
and Portugal, to maintain our troops in those 
countries : so much does war reverse the natural 
order of things. Instead of exporting our manu- 
factures to bring back gold, we were obliged to 
drain our circulation to send money in order to 
support our troops, whilst our manufacturers were 
either starving, or became members of that very 
army which caused their ruin. 


But if Spain, from the abundance of her gold 
and silver, imports such large quantities of manu- 
factured goods, is it not a check to her industry at 
iiome ? 

MRS. B. 
It certainly is ; though not so much as you would 
imagine, because she does not obtain the gold and 
silver of America free of cost : she obtains it partly 


in the form of a tax imposed by the mother-country, 
or rent for the royal mines ; and tlie rest by pay- 
ment in produce or manufactured goods. But 
these goods are not necessarily manufactured in 
Spain or Portugal. A Spanish merchant having 
imported goods from England and sent them to 
America, receives back gold and silver in payment, 
which are transmitted to England, if wanted there. 
Spain and Portugal being the entrepot, in conse- 
quence of the strict regulations by which the gold 
and silver are compelled to be brought to the mother- 

The want of industry in Spain, though it pro- 
ceeds in a great measure from the nature of its 
religion and government, is also in part attributable 
to the effect which the influx of the precious metals 
has produced. 
In Townsend's Travels in Spain, which abound 
,vith philosophical observations, it is stated " that 

* the gold and silver of America, instead of 

* animating the country and promoting industry, 

* instead of giving life and vigour to the whole 
' community, by tlie increase of arts, of manufac- 

* tures, and of commerce, had an opposite effect, 
' and produced in the event weakness, poverty, 

* and depopulation. The wealth which proceeds 
' from industry resembles the copious yet tranquil 

* stream, which passes silent, and almost invisible, 

* enriches the whole extent of country througli 

u 4 


" wliich it flows ; but the treasures of the new 
" world, like a swelling torrent, were seen, were 
" heard, were felt, were admired : yet their first 
" operation was to desolate and lay waste the spot 
" on which they fell. The shock was sudden; the 
" contrast was too great. Spain overflowed with 
" specie, whilst other nations were comparatively 
"■' poor in the extreme. The price of labour, of 
" provisions, and of manufactures, bore proportion 
" to the quantity of circulating cash. The conse- 
" quence is obvious ; in the poor countries industry 
" advanced; in the more wealthy it dechned. 

" Even in the present day (1806), specie being 
" about G per cent, less valuable in Spain than it 
" is in other countries, operates precisely in the 
" same proportion against her manufactures and 
*' her population." 

We may here, I think, conclude our observe 
ations on the principles of trade ; and having now 
explained the different sources from which a reve- 
nue may be derived, we shall at our next meeting 
make a few enquiries into the nature and effects of 












MRS. B. 

I TRUST that you now understand both the manner 

in which capital is accumulated, and the various 

modes ot employing it to produce a icvenue. It 

u 5 


remains for us to examine how this revenue may be 
disposed of. 


I liave already learnt that revenue may either be 
spent, or accumulated and converted into capital ; 
and that the more a man economises for the latter 
purpose, the richer he becomes. 

MRS. B. 

Tliis observation is equally applicable to the 
capital of a country, which may be augmented by 
industry and frugality, or diminished by prodi- 


Tlie capital of a country, I think you said, con- 
sisted of the capital of its inhabitants taken col- 

MRS. B. 

It does ; but you must be careful not to estimate 
the revenue of a country in the same manner, for 
it would lead to very erroneous calculations. Let 
us, for instance, suppose my income to be 10,000/. 
a-year, and that I pay 500/. a-year for the rent of 
my house — it is plain that this 500/. constitutes a 
portion of the income of my landlord ; and since 
therefore the same property, by being transferred 
IVom one to another, may successively form the in- 
come of several individuals, the revenue of the 
country cannot be estimated by the aggregate in- 
come of the people. 



And does not the same reasoning apply to the 
expenditure of a country ; since the 500/. a-year 
which you spend in house-rent will be afterwards 
spent by your landlord in some other manner ? 

MRS. B. 

True, because spending money is but exchanging 
one thing against another of equal value ; — it is 
giving, for instance, one shilling in exchange for a 
loaf of bread, five guineas in exchange for a coat ; 
instead of a shilling we are possessed of a loaf of 
bread ; instead of five guineas, of a coat ; we are 
therefore as rich before as after these purchases are 


If so, how is it that we are impoverished by spend- 
ing money ? 

MRS. n. 

It is not by purchasing, but by consuming the 
things we have purchased, that we are impoverished. 
When we have eaten the bread and worn out the 
coat, we are the poorer by five guineas and a 
shilling than we were before. 

A baker is not poorer for purchasing a hundred 
sacks of flour, nor a clothier for buying a hundred 
pieces of cloth, because they do not consume these 

u 6 


When a man purchases commodities with a view 
of re-selling them, he is a dealer in such commodi- 
ties, and it is capital which he lays out. But when 
he purchases commodities for the purpose of using 
and consuming them, it is called expenditure. Ex- 
penditure therefore always implies consumption. 


I understand the difference perfectly. The one 
lays out capital with the view of re-selling his goods 
with profit. The other spends money with the 
view of consuming the goods with loss; — that is 
to say, the loss of the value of the goods he con- 

MRS. B. 

Just so. Thus though the sum of money you 
spend will serve the purpose of transferring com- 
modities successively from one pei:son to another, 
yet the commodities themselves can be consumed 
but once. 

Therefore the consumption of a country may, 
like its capital, be estimated by the aggregate con- 
sumption of its inhabitants ; and the great question 
relative to the prosperity of the country, is, how far 
that consumption takes place productively, and 
how far unproductively. 


That certainly is a very important point ; for in 


the former case it increases wealth, in the latter it 
destroys it. 

Yet, Mrs. B., supposing a man were so prodigal 
as to spend not only the whole of his income, but 
even the capital itself, provided that it were spent 
in the maintenance of productive labourers, though 
it would ruin the individual, I do not conceive that 
it would injure the country ; for whether a man 
lay out his capital in the maintenance of produc- 
tive labourers with a view to profit, or whether he 
spend it in purchasing the fruits of their industry 
for the purpose of enjoyment, I can perceive no 
difference relative to the country ; in both cases 
an equal number of people would be employed, 
and consequently an equal quantity of wealth pro- 

MRS. B. 

I have a strong suspicion that the difficulty you 
feel in understanding clearly the distinction be- 
tween the employment and expenditure of capital, 
arises from confounding capital with money ? 


Indeed I think not ; my notion of capital is, 
that it consists of any kind of commodity useful 
to man. 


Well, then, suppose that two persons are possessed 
of such commodities to the value of 5000/. each: 


that the one distributes them out to industrious 
workmen, furnishing them with food and materials 
to work upon, and that by the time the various 
commodities have been finally distributed, the 
workmen have fashioned them into objects of an- 
other form, but of superior value to what has been 
consumed. Let the other distribute his capital 
amongst his servants, who in return amuse their 
employer with theatrical representations, fireworks, 
or any other species of enjoyment, which, by the 
time the commodities have been consumed, leave 
no other traces than the recollection that they 
Jiave existed. Can you see no difference in 
these two instances? 


Oh yes ; I see a very material difference : one of 
the capitals of 5000/. is destroyed, and the person 
who has consumed it thus idly is reduced to beg- 
gary. But this is not the case I put. Let the 
prodigal, instead of consuming his capital in the 
way you have described, spend it amongst trades- 
men, who will furnish him with articles for his en- 
joyment, such as magnificent apparel, splendid 
equipages, sumptuous entertainments. He will 
then replace the capital that those tradesmen have 
been consuming, in order to produce these commo- 
dities, which capital will again be usefully employed 
in producing more. 



MRS. B. 

That is very true ; and so far the prodigal has 
done no harm. In spending his capital amongst 
tradesmen, he has exchanged his various commo- 
dities for others of equal value, and the same quan- 
tity of capital exists as before the exchange took 
place; but what is the prodigal to do with the 
new stock that he has acquired ? 


It will be applied to the gratification of his de- 
sires : he will regale with his friends at the sump- 
tuous feasts, he will use the equipages, and clothe 
himself and his servants in the rich apparel. 

MRS. B. 

Then do not you see that you have only removed 
the evil one step farther? He and his friends 
will consume amongst servants and dependants, in 
fetes and splendid entertainments, what the trades- 
men furnished him with, instead of that which he 
gave in exchange for it; and that as much capital 
will be lost to himself and to the community in 
the one case as in the other. The spending of ca- 
pital is a sterile consumption of it, whilst its em- 
jiloyment is a reproductive consumption. 


But if nioney were not thus spent, what would 


the tradesman do with the luxuries which lie had 
prepared tor the purpose of supplying the derriand 
of persons who spend in order to enjoy ? 

MRS. B. 

Such tradesmen would certainly find less em- 
ployment ; but you would not thence conclude that 
the community would be injured. You have al- 
ready seen that capital cannot produce revenue 
unless it is consumed ; if it be consumed by in- 
dustrious persons, who work whilst they are con- 
suming it, something of superior value will be 
produced, and that product, whatever it may be, 
will be exchanged against other productions ; it will 
be distributed amongst another order of tradesmen, 
and will afford precisely the same amount of en- 
couragement, though of a different kind. What- 
ever is saved from the extravagant consumption of 
the rich, is a stock to contribute to the comforts of 
the middling and lower ranks of society. 


Yet how often has it been said that a generous 
and libcial expenditure, however injurious to the 
individual, was a source from which the middling 
and lower classes drew their principal means of 

MRS. B. 

There is not a more fatal delusion in political 


economy. By such wanton extravagance as we 
have been describing, the capital, which should 
annually furnish a subsistence to labourers, is 
wasted and destroyed, and the industrious are re- 
duced to idleness and want. They are covered 
with rags, because the prodigal has clothed him- 
self in gorgeous apparel; they "wander without a 
home, because the prodigal has erected a palace ; 
they must starve, because the wealth that should 
have fed them has been squandered in sumptuous 

It is easy to comprehend that the j)revalence of 
such conduct in a state must be followed by the 
gradual decay of its wealth and population. 


This is a most painful reflection ; but on the 
other hand it would not, I suppose, be possible for 
a country to make any progress in wealth by which 
the poor were not more or less benefitted ? 

MRS. B. 

Certainly not, if things are allowed to follow 
their natural course. Where property is secure, 
there is a general tendency to accunuilation of ca- 
pital. The great majority are governed by good 
sense and prudence, and their efforts to save and 
better their condition more than counterbalance 
the occasional loss that arises from the extrava- 


gance of spendthrifts. Besides, if expenditure were 
directed in too large a proportion towards the pro- 
duction of mere luxuries, and the number of per- 
sons employed in producing them were to be in- 
creased without at the same time augmenting the 
number of persons employed in producing articles 
of subsistence, the same quantity of provisions must 
be divided amongst a greater number of consumers; 
and as provisions, in consequence of being more 
scarce, would increase in price, the profits of agri- 
culture would become so great, that the capital 
which had been applied to the production of 
luxuries would flow to the more advantageous 
employment of agriculture, and thus the natural 
distribution of capital would be restored. 


The more I hear on this subject, and the better 
I understand it, the greater is my admiration of 
that wise and beneficent arrangement which has so 
closely interwoven the interests of all classes of 
men ! 

MRS. B. 

We are accustomed to trace the hand of Provi- 
dence chiefly in the natural world, but it is no less 
conspicuous in moral life, and cannot be more 
strongly exemplified than in that order of things 
which renders it essential to the interests of the 
rich not to turn the labour of the poor to the produc- 


tion of superfluities until they have provided an 
ample supply of the necessaries of life. 

But these Avise dispensations arc often in a great 
measure subverted by the folly and ignorance of 
man. An injudicious interference of government, 
for instance, may give peculiar advantages to the 
employment of capital in one particular branch of 
industry, to the prejudice of others, and thus de- 
stroy that natural and useful distribution of it, 
which is so essential to the prosperity of the com- 


If ever the legislature could interfere with ad- 
vantage, I should think it would be in some regu- 
lations respecting expenditure. I should be strongly 
tempted to restrain the use of luxuries, in order to 
induce the owners of capital to employ it in agri- 
culture, and such homely manufactures as are 
suited to the consumption of the poor: such a 
measure could not fail to produce a more equal 
distribution of the comforts of life. 

MRS. B. 
Sumptuary laws have been instituted with that 
view in many countries. But after all we have 
said of the benefits resulting from the natural dis- 
tribution of capital when unrestrained and unin- 
fluenced by political regulations, I am surprised at 


your wishing to compel people to employ it in one 
way rather than in another. 


But if that one way should prove the right way .'* 

MRS. B. 

Then capital will follow that direction by its 
natural impulse, without requiring any foreign aid. 
Be assured that the only right way is to leave the 
use of capital to the care of those to whom it be- 
longs ; they will be the most likely to discover in 
what line it can be employed to the greatest ad- 


Of their own advantage they are no doubt the 
best judges; but are you sure that they will be 
equally attentive to the advantage of the poor ? 
Sumptuary laws appear to me to afford peculiar 
encouragement to the production of the neces- 
saries of life. But the principal use of sumptuary 
laws would be to repress the expenditure of re- 
venue. And since it is so desirable that capital 
should not be dissipated, surely the same prin- 
ciples will apply to revenue ; would it not be ad- 
vantageous to save that also, in order to convert it 
into capital ? 

MRS. B. 

Capital, you know, has arisen solely from savings 


from revenue ; but you are aware that there must 
be a limit to such savings. 


Certainly tliere is a limit, because we could not 
live without consuming some part of it ; but the 
less we consume, and the more we save, the better. 

MRS. B. 

That is pushing the principle too far : we accu- 
mulate wealth for the purpose of enjoying it; and 
if by a liberal though prudent expenditure, social 
affections are cultivated, and the happiness of 
mankind promoted and extended, I see no reason 
why we should be debarred from indulging in some 
of the best feelings of our nature. 

The two extremes of parsimony and prodigality 
are perhaps equally pernicious ; the one as de- 
structive of the social and benevolent affections, the 
other as wasting the provision which nature has 
destined for the maintenance and employment of 
the poor. 

But there is another point of view in which 
sumptuary laws have a dangeixjus tendency. By 
diminishing objects of desire you run some risk of 
i^iving a general check to industry. 

Tell me why do the rich employ the poor ^ 



In order to derive an income from the profits of 
their labour. 

MRS. B. 

And what use do the rich make of this income ? 


ITiey either spend the whole, or they economise 
part in order to augment their capital. 

MRS. B. 

But why should they be desirous of increasing 
their capital ? 


There are so many reasons for wishing to be 
rich, that I scarcely know how to enumerate them. 
The pride of wealth is a motive^ith some men, 
the love of independence with others ; the appre- 
hension of future reverses incites a third to accu- 
mulate; the wish to increase his means of doing 
good stimulates the industry of another; the desire 
of providing for a family, and leaving them in afflu- 
ence, is a powerful inducement with many ; but the 
ambition of improving their situation in life, and of 
increasing their enjoyments by a more liberal ex- 
penditure, is, I think, the most general, and per- 
haps the strongest of all the motives for accu- 
mulating riches. 


MUS. B. 

If, then, laws be enacted which restrain a man 
from spending any part of his income in luxuries, 
you take away one of his motives for wishing to 
augment his capital : and a growing capital is, you 
know, an increase of subsistence for the poor. 


I would wish to prohibit only that excess of 
luxury which you have censured as pernicious. 

MRS. B. 

It is extremely difficult to draw the line between 
necessaries and luxuries; these form a scale which 
comprehends all the various comforts and con- 
veniencies of life, the graduations of which are 
too numerous and too minute to be distinct. 
We have considered as necessaries whatever the 
rate of wages of the lowest ranks of people have 
enabled them to command ; they would consider 
as luxuries whatever they have not been accustomed 
to enjoy ; though when they can afford it there is 
no excess. 

Excess, I conceive, depends not so much on the 
quantity or nature of the luxury, as upon its relative 
proportion to the means of the individual. A daily 
meal of meat is an excess of luxury to the family of 
a common labourer, because they arc not used to it, 
and their wages will not enable them to command it ; 


whilst a -table abounding with expensive delicacic* 
can scaFcely be called excess of luxury to a man 
whose income is so large that such gratifications do 
not prevent his making considerable savings. 


Since, then, it is impossible to define what are 
and what are not luxuries, no general line of pro- 
hibition can be drawn. 

MRS. B. 

The ruin which extravagance entails on the 
prodigal is his natural punishment, and serves as a 
warning to deter others from similar imprudence. 
Any attempt to prevent such partial evil by sump- 
tuary laws, would, generally, tend to depress the 
efforts of industry. The desire of increasing our 
enjoyments, and of improving our situation in life, 
as it is one of the strongest sentiments implanted 
in our nature, so I conceive it to be essentially 
conducive to the general welfare. It is the active 
zeal of each individual exerted in his own cause, 
which, in the aggregate, gives an impulse to the 
progressive improvement of the world at large. 
The desire of bettering his condition is justly con- 
sidered as a laudable disposition in a poor man, and 
it is a feeling dangerous to repress in any classet; of 



" The man of wealth and pride 

" Takes up a space that many poor supply'd ; 

" Space for his lake, his park's extensive bounds ; 

" Space for his horses, equipage, and hounds ; 

" The robe that wraps his limbs in silken sloth, 

" Has robb'd the neighbouring fields of half their growtii ; 

" His seat, where solitary sports are seen, 

'* Indignant spurns the cottage from the green." 

What can you reply to these beautiful lines, 
Mrs. B. ? I fear they are but too faithful a repre- 
sentation of the state of society. 

MRS. B. 

I must first enquire whether this man of wealth 
and pride either spends or produces capital in order 
to procure these gratifications. If the former, he 
deserves all the censure we have bestowed upon the 
spendthrift. If the latter, his wealth may possibly 
be more increased by his industry than diminished 
by his luxury. 


In all probability he does neither ; but being 
possessed of a considerable property, he lives upon 
his income ; and such an expensive style of living 
must greatly diminish, if not wholly absorb what 
he might otherwise economise. 

MRS. B. 

Still I cannot approve of compulsory measures 


to lessen his expenses. If it be desirable to stimu- 
late and encourage the industry of man, and induce 
him to accumulate wealth, he must be at full liberty 
to dispose of it according to his inclinations. It is 
unquestionably true, that unless the rich impoverish 
themselves by spending their capital, they cannot 
impoverish their country. 


That is not enough ; the question is, what are the 
best means of enriching their country ? 

MRS. B. 

One man sits down contented with his little 
property ; brings up his children with humble views 
and desires, and every year lays by something to 
provide for their future support in life. 

Another of a more ambitious character rises early 
and labours hard, exerting every faculty of his 
mind to turn his capital to the best account ; he 
likewise makes savings from his income, but they 
do not prevent his growing wealth from enabling 
him to spend more liberally, and enjoy more freely; 
and none of his enjoyments is more heartfelt, than 
that of having raised his family in the work! by 
the exertions of his industry. 


Every man who is striving to acquire wealth is 



certainly more or less actuated by the prospects of 
tlie various enjoyments which he hopes his increasing 
income will enable him to command. One wishes 
to become rich enough to marry ; another to keep 
a carriage, or a country-house ; a third to be able to 
settle his children respectably in the world. 

MRS. B, 

Such motives are strong incitements both to 
industry and ft-ugality ; and these useful habiis 
often remain when the cause which gave rise to 
them no longer exists ; it is far from uncommon to 
see men retain the taste for accumulatinir lonir after 
they have lost the inclination for spending. 

Dr. Adam Smith observes, that before the intro- 
duction of refined luxuries, the English nobles had 
no other means of spending their wealth, than by 
maintaining in their houses a train of dependants, 
either in a state of absolute idleness, or whose (^nly 
business was to indulge the follies or flatter the 
vanity of their patron ; and this is in a great mea- 
sure the case in Russia, Poland, and several other 
parts of Europe, even at the present day. We 
find that the consumption of provisions by the 
household of an English nobleman some centuries 
ago was perhaps a hundred times greater than ii 
.is at present. But you nuist not thence infer that 
the estate, which maintained such numerous rc- 
X 2 


tainers, produces less now than it did in those times ; 
on the contrary, it is perhaps as much increased as 
the consumption of the household is diminished. 
The difference is, that the produce, instead of sup- 
porting a number of lazy dependants, maintains 
probably a hundred times that number of indus- 
trious independent workmen, part of whom are 
employed in raising the produce of the estate, and 
part in supplying the nobleman with all the luxuries 
he requires: it was to obtain these luxuries, that 
he dismissed his train of dependants, that he im- 
proved the culture of his land, and that, whilst 
studying only the gratification of his wishes, he 
contributed so essentially to the welfare of his 

Here is a passage in Paley's Political Philosophy 
on the subject of luxury, extremely well worth your 

CAROLINE reads. 

" It appears that the business of one half of 
" mankind is to set the other half at work; that is, 
" to provide articles, which, by tempting the de- 
" sires, may stimulate the industry, and call forth 
*' the activity of those upon the exertion of whose 
" industry, and the application of whose faculties, 
*' the production of human provision depends. 
" It signifies nothing to the main purjjose of trade 
*' how superfluous the articles which it furnishes 
" are, whether the want of them be real or imagin- 


ary; whether it be founded in nature or in 
opinion, in fashion, habit, or emulation ; it is 
enough that they be actually desired and sought 
after. Flourishing cities are raised and supported 
by trading in tobacco; populous towns subsist 
by the manufactory of ribbons. A watch may be 
a very unnecessary appendage to the dress of a 
peasant, yet if the peasant will till the ground in 
order to obtain a watch, the true design of trade 
is answered ; and the watchmaker, whilst he po- 
lishes the case, and files the wheels of his machine, 
is contributing to the production of corn, as 
effectually, though not so directly, as if he handled 
the spade or the plough. If the fisherman will 
ply his nets, or the mariner fetch rice from foreign 
countries, in order to procure the indulgence of 
the use of tobacco, the market is supplied with 
two important articles of provision by the instru- 
mentality of a merchandise which has no other 
apparent use than the gratification of a vitiated 

This reminds me of an anecdote in Dr. Frank- 
lin's works. He describes the admiration which 
was excited by a new cap worn at church by one 
of the young girls of Cape May. This piece of 
finery had come from Piiiladelphia ; and with a 
view of obtaining similar ornaments, the young girls 
had all set to knitting worsted mittens, an article 
X 3 


iji request at Philadelphia, the sale of which enabled 
them to gratify their wishes. 

MRS. B. 

We often hear the poor reproached for aiming 
at things above their situation ; but I own that I 
delight in seeing them strive to ornament their 
cottages, to raise a few flowers amongst the nutri- 
tious vegetables in their gardens, to deck their 
room, though it be but with rows of broken china, 
cups, and plates, or a few gaudy prints ; it shows a 
desire of creditable appearance, and of aiming at 
something beyond the bare means of subsistence. 


The desire of improving their condition is not, 
however, in all cases a sufficient motive to rouse the 
industry of the lower classes. I once knew an easy 
indulgent landed proprietor, who having no ambi- 
tion to increase his income could never be induced 
to raise his rents ; his tenants, finding that they 
could pay their landlord and maintain their families 
as well as their neighbours, with much less labour, 
neglected their farms, and became so idle and dis- 
orderly, that the estate was the least productive of 
any in the county. 

MRS. B. 

The country thus suffered from the well-meant, 
but ill-judged indulgence of this landlord. 



But why was not the industry of these tenants 
stimulated by the desire of raising themselves in 
the world, which the forbearance of their landlord 
enabled them so easily to do ? 

MRS. B. 

In the course of time it probably would have had 
that eflfect ; but when uneducated men obtain an 
increase of wealth, the first use they generally 
make of it is to procure indulgences and exemption 
from labour ; it is only after becoming sensible that 
idleness leads them back to poverty, that they 
think of turning their wealth to better account. 
Well-educated people seldom require the experi- 
ence of so severe a lesson, but amongst the lower 
classes it is not uncommon to find that a great, and 
especially a sudden accession of riches, terminates 
in ruin. 


There are frequently instances of poor people 
being ultimately ruined by a high prize in the 

MRS. B. 

And the lower the state of ignorance and de- 
gradation of mind of the poor man wlio gains the 
prize, the more certain is his ruin. The different 
state of improvement of the lower classes in Eng- 
land, in Scotland, and in Ireland, are strongly ex.- 
x 4 


exemplified in this respect. If you were to give a 
guinea to a Scotch peasant, he would consider long 
how he could turn it to the best account ; he would 
perhaps buy a pig, or something that would bring 
a future profit. An English peasant is not quite 
so long sighted, yet he would contrive to derive 
some substantial advantages from the gift of a 
guinea; he would probably lay it out in repairing 
his cottage, or in purchasing some new clothes for 
his children. But the Irishman, whose joy would 
be the greatest of the three at such an unexpected 
acquisition of wealth, would in all likelihood spend 
the whole of it in drinking whiskey with his friends, 
and thus disable himself for the labour of the 
following day. 


And do you suppose that a sudden and consider- 
able increase of wages would be attended with 
mischievous effects to the labouring poor ? 

MRS. B. 

In the first instance it probably would. In ma- 
nufactures it is generally found that an accidental 
increase of wages, arising from a sudden demand 
for workmen, is productive of intemperance and 
disorderly conduct ; and this has been urged as a 
general objection to high wages ; but this bad effect 
seldom takes place unless the augmentation be 
sudden and unlooked for, and it discontinues when 


the high wages become regularly established. ^ ou 
may almost consider it as certain, that uneducated 
men will deriveno advantage from such an augment- 
ation of income as raises them suddenly above their 
accustomed habits of life. The beneficial effects I 
have described to you in one of our preceding con- 
versations as arisinfj from increasing wealth and de- 
mand for labour, must be gradual in order to prove 
useful to the lower classes. 


All that you have said reconciles me, in a great 
measure, to the inequality of the distribution of 
wealth ; for it proves that, however great a man's 
possessions may be, it is decidedly advantageous 
to the country tliat he should still endeavour to 
augment them. Formerly I imagined that VA'hat- 
ever addition was made to the wealth of the rich 
was so much subtracted from the pittance of the 
poor, but now I see that it is, on the contrary, an 
addition to the general stock of wealth' of the 
country, by which the poor benefit equally with 
the rich. 

MRS. B. 

Yes j every accession of wealth to a country must 
have not only employed labourers to produce it, but 
will in future employ other labourers in order that 
the proprietor may derive an income from it. For 
every increase of capital is the result of a past and 
the cause of a future augmentation of produce; 
X 5 


therefore whatever a man's property may be, he 

should be encouraged to improve it. I will read 

you an eloquent passage in Bentham's Thecn'ie de la 

Legislation on the subject of luxury. 

" L'aitrait du plaisir, la successions des besoins, 

" le desir actif d'ajouter au bien etre, produiront 

*' sans cesse, sous le regime de la surete, de nou- 

" veaux efforts vers des nouvelles acquisitions. Les 

" besoins les jouissances, ces agens universels de la 

" societe apres avoir fait eclore les premieres gerbes 

" dc blcs, clevcront peu a peu les magazins de 

" I'abondance toujours croissans et jamais remplis. 

" Les desirs s'etendant avec les moyens ; I'horizon 

" s'aggrandit, a mesure qu'on s'avancc, et chaque 

" besoin nouvcau egalemcnt acconipagne de sa 

" peine ct de son plaisir devient un nouvcau prin- 

" cipe d'action ; I'opulcnce qui n'est qu'un terme 

" comparatif n'arrete pas meme ce mouvement, 

" une fois qu'il est imprime, au contraire plus 

'* on opere en grand, plus la recompense est 

" grande, et par consequent plus est grande 

" aussi la force du inotif qui aninie I'homme au 

" travail. 

" On a vu que I'abondance se forme peu a 

" peu par r operation continue des memcs causes 

" qui ont produit la subsistence. II n'}' a done 

" point d'apposition cntrc ces deux buts. Au con- 

" trairo plus I'abondance augmente plus on est sur 

" dc la substance. Ceux qui blament i'abondance 



*' SOUS le nom de Luxe u'ont jamais saisi cette con- 
" sideratioii. 

" Lcs inteniperies, les gucrrcs, les accidens de 
" toute espece attaquent souvcnt le fond de la sub- 
" sistciice; ensortequ'une society (|ui n'auroit pasde 
" superflu et nicmc bcaiicoup de siiperiiu seroit su- 
"jette a nianqucr souvcnt de luccssaire; c'est ce 
" qu'onvoit chcz les pcuplcs sauva^es. C'est ce qu'on 
" a vu tVequeuinient chcz toutcs les nations dans 
" les terns de I'antique pauviete. C'est ce qui 
" arrive encore de nos jours dans les pays peu 
" favorises de la nature, tel que la Suede, et dans 
" ceux ou le gouvcrnemcnt contrarie les operations 
" du commerce au lieu de se borner a le proteger. 
" Mais les pays ou le luxe abonde ct ou I'adniinis- 
" tration est eclairce, sont i\ I'abri de la famine. 
" Telle est I'heureuso situation dc I'Angletcrre. 
" Des manufactures dc luxe dcvicnncnt des bu- 
" reaux d'assuranccs contre la (!i?5ette. Une fa- 
" brique de bierre ou d'amidon se convortira cu 
" moyen de subsistence. Que de fois n'a t'on pas 
" dcclame contre les chevaux et les cliiens conmie 
*' ddvorant la subsistence des honnnes ! Cts pro- 
" fonds politiques ne s'elevcnt (jue d'un dtgre 
" au dcssus de ccs apotrcs du desinteressment (jui 
" pour ramcner I'abondancc des bJes courent in- 
" cendier les magazins." 


Wc had not yet considered luxury undii- tiiis 
X 6 


point of view; I confess I was of the opinion of those 
who thought that dogs and horses devoured the 
subsistence of man, but I am much better pleased 
to think that the food which luxury raises for the 
nourishment of those animals may, in case of ne- 
cessity, become nourishment for the human species ; 
and, if a famine should take place, even the ani- 
mals themselves would afford a resource. 

MRS. B. 

Hair-powder we may consider as a kind of 
granary for the preservation of wheat, for though 
the powder would not, unless in cases of very great 
urgency, be converted into food, the quantity of 
corn annually grown for the purpose of making 
hair-powder would, during a moderate scarcity, 
find its way more readily to the baker's than to 
the perfumer's shop. 


And pray, Mrs. B., what do you think of the 
luxury of the Romans? We read in Pliny of a 
Roman lady who was dressed in jewels to the 
amount of 300,000/. I recollect, also, an account 
of a 4i«h of fish having cost 641. 

MRS. B. 
These are but trifling instances of profusion, in 
comparison of some others related of the Romans. 


Marc Antony expended 60,000/. in an entertain- 
ment given to Cleopatra. And the supper of He- 
liogabalus cost 6000/. every night. But nothing 
can be said in apology for the luxuries of the Ro- 
mans; they were extremely ohjcctiouable, because 
their wealth did not proceed from industry, but 
from plunder. Their extravagance and profusion, 
therefore, far from being a spur to industry, acted 
in a contrary direction ; it encouraged the love of 
rapine in themselves, whilst it depressed the spirit 
of industry in the countries subject to their power, 
by destroying the strongest of all inducements to 
labour, the security of property. It has been well 
observed by Macpherson, that " the luxuries of 
" the Romans cannot be considered as the summit 
" of a general scale of prosperity; it was a scale 
" graduated but by one division, which separated 
" immense wealth and power from abject slavery, 
" wretchedness, and want." 

In considering the advantages to be derived from 
luxury, we must, however, carefully remember, that 
it acts in a twofold manner ; whilst on the one hand 
it encourages industry, on the other it increases ex- 
penditure ; so far as its productive powers prevail 
over its prodigal effects, it is beneficial to mankind ; 
but in the contrary case it becomes an evil, and 
when it encroaches on capital we have seen that it 
is an evil of the greatest magnitude. 

The grand object to be kept in view in order to 


promote the general prosperity of the country, is 
the increase of capital. But it is not in the power 
of the legislature to promote this end in any other 
way than by providing for the security of property; 
any attempts to interfere either with the disposal of 
capital or with the nature and extent of expendi- 
ture, are equally discouraging to industry. 


Whoever, I conceive, augments his capital by 
savings from his income, increases the general stock 
of subsistence for the labouring classes; whilst he who 
spends part of his capital diminishes that stock of 
subsistence, and consequently the means of em- 
ploying the labouring classes in its reproduction. 

Every man ought, therefore, to consider it as a 
moral duty, independently of his private interest, 
to keep his expenditure so far within the limits of 
his income that he may be enabled every year to 
make some addition to his capital. 

MRS. B. 

And the question what that addition should be, 
must depend entirely upun the extent of his in- 
come, and his motives for expenditure. We can 
only point out illiberal parsimony, and extravagant 
prodigality as extremes to be avoided; there are 
so many gradations in the scale between them, that 
every man must draw the line fox himself, accord- 


ing to the dictates of his good sense and his con- 
science, and in so doing should consult, perhaps, 
the moral philosopher as well as the political eco- 
nomist. He who has a large family to maintain 
and establish in the world, though more strict eco- 
nomy be required of him, cannot be expected to 
make savings equal to those of a man of a similar 
income, who has not the same calls for expenditure. 
But however large a man's income may be, he 
has no apology for neglect of economy. Economy 
is a virtue incumbent on all ; a rich man may have 
sufficient motives to authorise a liberal expendi- 
ture, but he can have none for negligence and 
waste ; and however immaterial to himself the loss 
which waste occasions, he should consider it as so 
much taken from that fund which provides main- 
tenance and employment for the poor. 


A CCUMULATION of wealth, 88. 

Adulteration of the coin of the country, 344. 

its effect on wages, 345. 

has been adopted in almost all countries, 346. 
Agriculture, introduction of, 19. 42. 181. 

whether preferable to other branches of industry, 181. 

of the proportion it should bear to manufactures and 
commerce, 185. 

most advantageous to newly settled countrie«, 186. 

yields two incomes, 232. 

Metayer system of, 250. 

state of, in France, 252. 
Agricultural produce, high price of, 201. 

not susceptible of unlimited increase, 202. 

causes of its high price, 204. 

causes wh'.ch lower its price, 211. 

high price of, necessary to proportion the consumption 
to the supply, 226. 

the first commodity whichacountry exports,388. 411. 
Alms-giving, effects of, 175, 176. 
America, increase of population in, 143. 

exports corn, 388. 

agriculture of, 411. 

effects of its discovery on Uie industry of Europe, 336. 

174 INDEX. 

America, the produce of its mines liow distributed throughout 

the world, 458. 
Annuitants, affected by the exchangeable value of money, 327. 
Art, advantages it has over the powers of nature, 185. 


Balance of trade, 423. 

popular error respecting it, 435. 
Banks, saving, advantages of, 1 70. 
Banks, issuing notes, 549. 

of Amsterdam, 551. 

of England, 555. 

restrifction of paying in specie, 354. 
Barter, origin of, 67. 
Benefit clubs, or friendly societies, advantages resulting 

from, 168. 
Bentham's Theorie de Legislation, extract from, on the effects 

of luxury, 466. 
Bills of exchange, their use in foreign commerce, 421. 
Blackstone's Commentaries, extract from, on civil liberty, 45. 
Bounty, on the exportation of goods, 391. 
Buchanan's edition ofAdam Smith's passage from, on price, 5 13. 


Canals, advantages arising from, 376. 379. 
Capital, origin o.'', 88. 

tmploynitnt of, 90. 105. 

profits derived from, 93. 97. 

necessary for iill productive enterprises, 98. 296. 

fixed and circuhiting, distinction of, 107. 

definition of, lis. 

of a country, 118. 442. 

effect of its increase on profit and wages, 125 

effect of its diminution, 128. 

increase of, in Europe, 148. 


Capital, increase of, in America, 143. 

various modes of employing it, 181. 
required for agriculture, '235, 234. 
lent at interest, 269. 
quicii return of, in the home-trade, 381. 
expenditure of, 444. 
increase of, always advantageous, 470. 
Cheapness, beneficial only when it arises from a low cost of 
production, 310,311. 
only nominal when arising from scarcity of money, 
325. 527. 
Circulating capital explained, 107. 
Civilisation, progress of, 46. 
Civilised state of society, 20. 

Clarke's(Dr,) Travels, extractfrom, oninsecurity of property,57. 
Coined money, antiquity of, 318. 

advantages of, 319. 
Coin, adulteration of, 344. 
Colonies, establishment of, 163, 
Commerce, a mode of employing capital, 364. 
foreign, 380.384. 
advantages of, 387. 390. 
Competition of sellers reduces prices, 399. 
Consumption, distinguished from expenditure, 443. 
of a country, 444. 
productive and unproductive, 444. 
Corn, unknown crigin of, 48. 
-trade, 405. 

home and foreign supply of, 406. 
exportation of, 411. 
natural high price of, 204. 
Cost of production of commodities, 395. 298. 
component parts of, 298. 
diminished, cause of cheapness, 310. 
Creditor, public, how repaid. 282. 

476 INDEX. 


Dairy, establishments of Fruitieres in Switzerland, 255. 
Debt, national, 283. 
Demand, definition of, 124. 

for labour, on what it depends, 142. 

for the necessaries of life, 203. 

and siippl}', 306. 
Depreciation of money, its effect on price, 341. 
Division of labour, 73. 

passages from Adam Smith on, 72, 73. 76. 

its effect on the moral and intellectual faculties, 83. 

its effect in the multiplication of wealth, 88. 


Economy, 470. 

Edinburgh Review, extract from, on small farms, 260, 
Education of the poor, advantages of, 165. 
Emigration, a resource for redundant population, 162. 

impolicy of restraining it, 163. 

under some circumstances injurious to a country, 164. 
Employment of capital, 94. 120. 
Exchange, bill of, its use in trade, 421. 

unfavourable, or below par, 424. 

premium on, 424. 

unfavourable, promotes exportation, 429. 

how affected by depreciation of currency, 432. 

nominal, 434. 
Exchangeable value, 293. 314. 

definition of, 294. 

and natural value do not always coincide, 308. 

of money, what classes of men affected by its 
variations, 329. 
Expenditure, 102.441. 

distinguished from consumption, 445. 

INDEX. 477 

Expenditure of capital, its consequences, 282. 44-;. 
Exportation of corn, under what circumstances advantageous, 

Farmers, exposed to small risks, 195. 
require capital, 253. 
gentlemen, 246, 247. 
Farms, small, objections to, 253. 

what size most advantageous, 259. 

size of, in Belgium and Tuscany, 259. 
Fisheries, rent of, 265. 
Fishing, capital required for it, 99. 
Fixed capital, 107. 
Foreign trade, 384. 

advantages of, 387, 388. 

advantageous to both countries engaged in it, 398. 
Franklin, passage from, on prohibitions in trade, 402. 

anecdote from, on the effects of luxury, 461. 
Friendly societies, or benefit-clubs, 168. 

Gardens, for cottagers, 178. 

Gamier, extract from, on the employment of capital, 188. 

Gold, how paid for, 321. 

-coins, antiquity of, 318. 

-bullion, the standard of value of coined money, 359. 
-bullion, high price of, 360. 
and silver, effect of its influx in Spain, 438, 439. 
Goldsmith'sDeserted Village, passages from, on small farms, 251. 
on inclosures, 161. 
on emigration, 163. 
on luxury, 457. 
Goods, community of, 59. 

478 INDEX. 

Governments, origin of, 19. 

errors of, in political economy, 22. 
despotic, effects of, 55, 54, 55. 51. 


Happiness, how influenced by wealth, 103. 
Home trade, 380, 381. 


Ignorance of savages, 52. 
Importation of com, 411, 
Income, or revenue, origin of, 93. 
derived from profits, 101. 
Industry, encouraged by security, 38. 
of the Swiss, G3. 

limited by extent of capital, 101, 160. 
encouraged by emancipation, 110. 
by high wages, 153. 
by piece-work. 154. 
Interest of money, 269. 

diminishes, as wealth and population increase, S75. 

varies in different countries, 276, 277. 

low rate of, a sign of prosperity, 277. 

impolicy of fixing it by law, 279. 

in ancient times and countries, 278. 

in the public funds, 281. 


Jesuits, their establishment in Paraguay, 62. 

Labour, its effect in the production of wealth, 31. 

considered as a cause of value, 295. 
Labourers, productive, 9. 

INDEX. l/y 

Labourers, unproductive, 284. 

Land mortgaged, 271. 

Landed property, 55. .58. 

Laws, utility of, 40. 

Leases, their terms and duration, 337. 

Loans, to individuals, 269. 

to government, 280, 281. 
Luxury, a relative term, 455. 

its excess only pernicious, 456. 

promotes industry, 456. 

a resource in scarcity, 468. 

of the Romans, objections to, 468. 

when beneficial, and when injurious, 469. 


Machines, their effect in abridging labour, 75. 
Machinery, objections to it, 112. 

advantages derived from it, 113. 
Macpherson's History of Commerce, extract from, on ma- 
chiner}', 115. 

on fixing the price of provisions, 133. 135. 
Manufactures, their influence on population, 151. 

rate of their profits, 190. 
Measures of value, all imperfect, 302 — 326, 
Merchants, rate of their profits, 190. 
Metals, used only in civilised countries, 81. 
Metayer system of farming, 250. 

in Belgium and Tuscany, 259. 
Mines, first worked in England, 81. 

in general, 262. 

of coal, 262. 

of metal, 263. 

great risk attending them, 263. 

480 INDEX. 

Mirabeau's Monarchic Prussienne, passage from, on free trade, 

Money, lent at interest, 269. 

in general, 315. 

its use as a medium of exchange, 516. 

various articles used for this purpose, 317. 

coined, antiquity of, 318. 

advantages of, 319. 
' its use as a standard of value, 319. 

not an accurate standard of value, 322. 

cheapness of commodities arising from its scarcity, 

dearness of commodities arising from its abundance, 

depreciation of, 527. 340. 

variation in the exchangeable value of, 328. 

has of late years fallen in value, 331. 342. 

has real value, not merely a sign, 333. 

impolicy of preventing its exportation, 534. 537. 

effects of its free exportation, 558. 

how it regulates price, 542. 

its value in ancient times, 343. 

adulteration of, 344. 

of paper, no real value, 547. 

excess of, creates depreciation, 355. 

expedients for economising it, 356. 362. 
Moravians, their institution, 63. 
Mortgage of land, 271. 

National debt, 285. 
Natural value, 289. 

of gold bullion, 321, 
Natiu-e, of the variety and profusion of her gifts, 40, 41. 45. 

assists the labours of man, ) 82. 

INDEX. 481 

Necessaries of life, definition of, varies in different countries, 

effects of redundancy of, 409. 
Nominal cheapness, 324. 

exchange, 454. 

Paley's Moral Philosophy, passage from, on accumulation of 
wealth, 148. 

o!i agriculture, 240. 

on luxury, 460. 
Paper money, no real value, 347. 

its effect in driving specie out of the country, 352. 

excess of, creates depreciation, 355. 
Pastoral life, 19. 47. 
Piece-work stimulates industry, 154. 
Poor-rates, objections to, 171. 

lowers the price of labour, 172. 
Political economy, errors arising from ignorance of its prin- 
ciples, 7. 

advantages arising from some of its principles, 1 1. 

difficulties to be surmounted in this study, 14. 

definition of, 18. 
Population, wages how affected by it, 124. 128. 

rapid increase of, in America, 143. 

in Europe, 144. 

great, under what circumstances advantageous, Hff. 

effects of its increase beyond the means of subsist- 
ence, 147. 

naturally increases with capital, 155. 

redundant, relieved by emigration, 162. 
Poverty, 100. 
Price, impolicy of the legislature interfering with it, 1 33. 

482 INDEX. 

Price of raw produce, how regulated, 210, 

and value, 289. 

defined, 291. 

generally equivalent to cost of production, ^5, 

how afit'cted by scarcity of money, 323. 

how affiected by depreciation of monc)', 525* 

various circumstances affecting it, 328. 

how regulated, 338. 

reduced by free competition of sellers, 399. 
Prodigality, its pernicious effects, 449. 
Production, cost of, 295. 
Productive labourers, 97. 284. 
Profits, derived from the employment of capital, 97. 

of capital, 126. 

decrease with decrease of capital, 128. 

tending to equality in all employments of capital, 192. 

proportioned to the degrees of risk, 195. 

circumstances which derange the equality of profits, 

of agriculture diminish as inferior soils ate culti- 
vated, 208. 

of the farmer, how calculated, 235, 

of mining, 264. 

a component part of cost of production, 298. 

great, of small dealers, 372, 
Promissory notes, 349. 
Property, security of^ 37. 

in land, 38, 39. 

consequences of its establishment, 48, 49. 

cpnsequenccs of its insecurity, 53. 

iu common, objections to it, 59. 

in land, effects of its extreme division, 253. 

Rent, 199. 

effect of the high price of agricultural produce, aoi. 

ISDEX. ^83 

Rent, deriretl from tlic mrpliis produce of agriculture, '20i. 

why not paid in new settlements, 205. 

origin of, *J07. 

definition of, 211, 

consequences of its abolition, 224, 225, 226. 

rise positively, but not relatively, 225. 

of farms, '236. 

of mines, 262. 

of fisheries, 26'5. 

a component part of cost of production, 297. 
Revenue, or income, origin of, 93. 102, 105. 

modes of employing capital to produce it, 181- 

derived from property in land, 199. 

derived from cultivation of land, 2S2. 

of those who do not employ their capital themselves, 
Rewards, advantages of, 178. 
Uicbes, of what they consist, 26. 
Rich and poor, distinction between, 89. 

contract between, 90. 95, 

Saving banks, 170. 

Say's Political Economy, extract from, on the invention uf 
printing, 116. 
on prohibitions in trade, 401. 
Scarcity, its etiect on wages, 128. 

its ctlc'tt on price, 505, 
Seciu-ity, stimulus to industry, .3". 
Skill, acquired by the division of labour, 7.5. 

higher wages paid for it, l.>9. 
Slavss, fixed capital, 109. 
Slavery, discouraging to industi-y, 1 10. 

Smith, Adam, passage from, on the division of labour, 75. 76. 
Y 2 

484 INDEX. 

Smith, Adam, on forging nails, 78. 

on value, 292. 
Soils of inferior quality increase the cost of production, 210. 
Spain, her industry affected by the American mines, 438. 
Spinning jennies, invention of, 114, 115. 
Statute of labourers, 135. 
Stockholders, fictitious capital of, 282. 

affected by variations in the value of money, 332. 
Sumptuary laws, 452. 

effects of, 456. 

Telemachus, passage from, on Salentum, i. 

on Bcetica, 59. 
Tenants at will, 238. 

Townsend's Travels ip Spain, passage from, on alms-giving^ 

on gentlemen-farmers, 246. 

on farms held in administration, 249. 

on the influx of gold and silver in Spain, 439. 
Trade, wholesale and retail, distinction of, 365. 

general advantages of, 366. 

wholesale, 567. 

retail, 371. 

home, 350, 331. 

policy of freedom of, 415. 


Unproductive labourers, 284. 

how affected by fluctuations in the value of money, 

Usury, 277. 
Utility considered as essential to value, 291. 296. 



ValiK; and price, 2SP. 

in exchange, 292. 309. 

its competent parts, 298. ."00. 

natural, oOO. .~08. 

anil price, distinction between theui, 291. 

no accnrate measure of, .'502. 326. 
Vineyards and olive-grounds, tenure of, 302. 
Volncy's Travels, passages from, on the effects of despotic 
governments, 53, 54, 55. 


Wages, origin of, 91. 

of labour, their limits, 120. 

liow regulated, 123. 143. 

increase witii increase of cai)ital, 126. 

decrease with increase of population, 128- 

diniinish with diminution of capital, 128. 

impolicy of being fixed by law, 131. 

low in Ireland, 157. - 

proportioned to skill, 139. 

proportioned to the severity and disagrecableness of 
the labour, 139. 

how affected by scarcity, 155. 

high, not always accompanying great capital, 141. 

in China, HI. 

in America, 142. 

rise of, in England, 1 18. 

high, encourage industry, 153. 

lovrereil by i)Oor-rates, 172. 

component |)art of saluc, 296. 

affected by ailulteration of the coin, .'-r". 

effects of sudden increase of, 464. 
Wealth, definition of, 26. 274. 
y ,7 

486 INDEX. 

Wealth, accumulation of, 90. 

reproduction of, 94. 101. 
incitements to increase it, 459. 462. 
efiects of sudden increase of, 463. 


Yeomanry, 224. 

Young's, Arthur, Travels in France, 

passage from, on the extreme d 
Dertv. 252. 

issage from, on the extreme division of landed pro- 
perty, 252. 


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Priuiers-Stieet, London. 

Central University Library 

University of California, San Diego j 
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